Microsoft licensing has never been simple. But three overlapping changes are making the next Enterprise Agreement renewal the most consequential in a decade — and most mid-market organizations are not prepared for the conversation.
If your EA renewal is approaching in 2026 or 2027, here are the three things you need to evaluate before you sign.
1. The volume discount is gone
For over a decade, larger organizations received better Microsoft pricing through Enterprise Agreement tier levels. Organizations with more seats paid less per seat. It was a straightforward incentive to consolidate on Microsoft.
That model was eliminated on November 1, 2025. All customers — from 500 seats to 50,000 — now pay the same Level A pricing. There are no volume discounts.
For organizations that previously benefited from Level C or D pricing, this translates to 6-12% increases at renewal before any other changes are factored in. Education and government customers (federal, state, and local) are exempt, but everyone else is affected.
The practical implication: the economic advantage of consolidating everything under a single EA has weakened. For many mid-market organizations, this is the moment to evaluate whether a Cloud Solution Provider (CSP) licensing model offers better flexibility. CSP agreements provide monthly or annual billing options, dedicated support, and — now that volume discounts no longer exist — comparable economics without the multi-year commitment.
2. Teams is no longer included
Under pressure from EU antitrust regulators, Microsoft unbundled Teams from its Enterprise licence tiers (E1, E3, E5) globally. After initially requiring new Enterprise customers to purchase Teams separately at $5.25 per user per month, Microsoft reversed course in late 2025 — Enterprise suites with Teams included are available again. But so are the lower-priced versions without Teams.
If your organization is on a Business, government, nonprofit, or education licence, Teams remains bundled automatically. For Enterprise customers, the unbundling created a choice that did not exist before — and at renewal, it is worth asking whether you should be paying for it.
The question is not just whether to pay the $5.25. It is whether this is the right moment to evaluate your entire unified communications stack.
With over 350 million monthly active Teams users globally but only around 7% using Teams Phone, most organizations are paying for Teams as a chat and video tool while maintaining separate voice infrastructure. Meanwhile, roughly 45% of phone systems remain on-premise — legacy PBX systems from Avaya, Cisco, Mitel, and others that are approaching or past end of life.
If you are paying to add Teams back to your licence and you have not evaluated Teams Phone or alternative UCaaS platforms (Dialpad, RingCentral, Zoom Phone, Nextiva), you are potentially paying twice for overlapping capabilities.
The Teams unbundling makes this evaluation natural and timely. It is not about leaving Microsoft — it is about ensuring you are not paying for redundancy.
3. July 2026 price increases are coming
Microsoft has announced price increases across most Microsoft 365 primary SKUs effective July 2026. The company is adding capabilities to justify the increases — Copilot features, Defender for Office 365 Plan 1 now included in E3, advanced Intune capabilities — but the net effect is a higher bill.
On top of the standard increases, Microsoft launched the E7 “Frontier Suite” on May 1, 2026 — the first new Enterprise licence tier since E5 was introduced in 2015. E7 bundles E5 with Copilot 365, Agent 365 (Microsoft’s AI agent governance console), and advanced security and identity features.
E7 is Microsoft’s AI-era enterprise licence. For organizations already paying for Copilot and advanced security add-ons separately, it may offer consolidation value. But for most mid-market organizations, it is a premium tier that will be positioned aggressively by Microsoft sales teams — and evaluating whether you actually need it requires an honest assessment of your AI adoption maturity.
The Copilot question
Microsoft Copilot is central to the licensing conversation in 2026. Early enterprise deployments produced mixed results — not because the technology failed, but because organizations deployed Copilot without identifying specific business problems it would solve, without ensuring their data was ready, and without executive alignment on what success looked like.
The pattern is familiar: technology investment before readiness assessment. Copilot works best when your data is centralized in the Microsoft ecosystem (Azure, SharePoint, OneDrive), when you have identified high-impact use cases, and when you have quantified the expected ROI.
If your Microsoft sales team is bundling Copilot into your renewal conversation, the right response is not to accept or reject it — it is to evaluate whether your organization is ready to extract value from it. If the answer is not yet, paying for the licence is premature.
What to do before your renewal
Audit your current licensing. Most mid-market organizations are overpaying for Microsoft licences they do not fully use. Unused E5 features, redundant add-ons, and seats assigned to departed employees are common sources of waste.
Model the CSP alternative. With volume discounts eliminated, CSP licensing deserves a fresh comparison. The flexibility and billing model may better suit your organization’s needs.
Evaluate your UC stack. If you are paying to add Teams back to your Enterprise licence, run the numbers on Teams Phone and alternative UCaaS platforms against your current voice infrastructure costs.
Assess Copilot readiness separately. Do not let Copilot licensing get bundled into your EA renewal without an independent evaluation of whether your organization’s data, processes, and use cases are ready for it.
Start now, not at renewal. Microsoft renewal negotiations favour preparation. Understanding your options and having alternatives evaluated in advance changes the dynamic of the conversation.
The parallel to VMware
If this feels familiar, it should. Like the VMware/Broadcom disruption, Microsoft’s licensing changes are unilateral vendor decisions that increase costs and complexity for mid-market businesses. In both cases, the organizations that navigate best are the ones that evaluate their options independently — before the vendor’s timeline dictates the decision.
At node corp., our cloud advisory practice helps mid-market organizations navigate licensing complexity across Microsoft, VMware, and other major platforms. We audit your current spend, model alternatives, and ensure your renewal decisions are informed by market reality — not vendor pressure.
If your Microsoft EA renewal is approaching, schedule a cloud briefing with our advisory team.