Navigating Microsoft’s new licensing changes: what ITAM professionals need to know

Find out more below

Navigating Microsoft’s new licensing changes: what ITAM professionals need to know

With several changes announced by Microsoft last month gradually taking effect, are you prepared for what these changes may bring?

Published on 13th December 2024

Are you aware of Microsoft’s latest licensing changes? Microsoft is undergoing a series of licensing changes aimed at improving partner engagement and customer experience, with added AI advancements. Here’s what you need to know to ensure you’re managing costs, staying compliant, and aligning with your business strategy.

Key changes to Microsoft’s licensing model

Changes to Cloud Enterprise Agreements (EA) — Effective January 2025:

Microsoft is phasing out the traditional Enterprise Agreement (EA) in select markets, with renewals no longer available. For enterprise customers, Microsoft is pivoting to the Microsoft Customer Agreement for Enterprise (MCA-E), a more streamlined, digital solution. This shift seems to signal a move toward prioritizing direct sales to enterprise clients. However, small and medium-sized customers (SMC) will still have the flexibility to choose between the Cloud Solution Provider (CSP) or the MCA-E, depending on whether they prefer value-added services through partners (CSP) or direct purchasing from Microsoft (MCA-E).

Enhanced partner incentives and support:

To balance its direct sales approach, Microsoft is increasing partner incentives for SMC customers, with 70% of partner investment for FY25 focusing on these customers. This includes incentives for enterprise agreements, renewals, and outcome-based opportunities tied to customer growth and AI integration. Additionally, a new Maximum Resale Price (MRP) formula will apply to all Microsoft products in channel partner agreements for volume licensing, starting in July 2025, to better support sales to public customers.

Price increases and flexibility updates

Microsoft 365 Copilot products:

Beginning in December 2024, Microsoft will introduce a monthly billing option for annual subscriptions of its Microsoft 365 Copilot products (e.g. Microsoft 365 Copilot, Microsoft 365 Copilot for Sales, Microsoft 365 Copilot for Service). This option comes with a 5% price increase compared to the annual upfront payment model. This new billing option will be available across Buy Online, CSP, and MCA-E channels.

General Microsoft 365 product increases:

Starting in April 2025, Microsoft will implement a 5% price increase on monthly billed licenses for Microsoft 365, Office 365, Enterprise Mobility + Security, Windows 365, Dynamics 365, and Power Platform (including Power BI). Teams Phone licenses will also see significant price hikes, including:

Teams Phone Standard: $10 per user
Teams Phone Standard for Frontline Workers: $4 per user
Teams Phone with PAYG calling: $12 (UK/CA) and $13 (US and other markets)
Teams Phone with Calling Plan: $17 (US/UK/CA) and $22 (other markets)
Teams Phone with Domestic and International Calling: $24 a user

Additionally, a 5% monthly price increase will be applied to these new annual subscription rates for Teams Phone.

AI readiness support and commitments

AI discounts:

To help partners prepare customers for AI, Microsoft will offer a 15% discount on Microsoft 365 E5 annual subscriptions for new customers with 1 to 2,400 licenses between January and June 2025.

Commitment to AI and partners:

In line with its AI strategy, Microsoft is expanding its Copilot Copyright Commitment (CCC) to include reseller partners. This expansion offers legal protections similar to those provided to direct customers purchasing AI offerings. Resellers will also be updated on the new processes for managing CCC claims.

Emphasizing commitment

Microsoft is emphasizing its commitment to empowering both partners and customers, especially in the AI era. By enhancing partner incentives, flexibility, and legal protections, Microsoft aims to ensure successful business outcomes. For more details on the changes, you can check out Microsoft’s official announcements: