January 2026. The CFO reviews invoices for Enterprise Agreement renewal with Microsoft. They see a 23% increase compared to the previous year — even though the company didn’t buy a single new license. They call the IT department with a question: “What happened?” The answer: “Microsoft changed the rules. Volume discounts we’ve had for 15 years no longer apply. Now everyone pays list prices.”

This is not a fictional scenario. Since November 1, 2025, Microsoft has implemented a fundamental change in volume licensing programs: companies renewing or purchasing new Online Services under Enterprise Agreement (EA) or Microsoft Products and Services Agreement (MPSA) pay the same list price (Level A) — regardless of organization size.

For large enterprises that negotiated discounts of 15-25% over the years due to purchase volume, this means an immediate cost increase. For Microsoft, it’s revenue consolidation. For IT and procurement departments — the need to fundamentally rethink licensing strategy.

This article analyzes the full picture of Microsoft licensing changes taking effect in 2026, their financial impact on organizations, and strategies for minimizing costs and preparing for the growing wave of licensing audits.

What exactly did Microsoft change in Enterprise Agreement pricing?

“The shift to cloud and subscription-based licensing has fundamentally changed how organizations need to manage software compliance.”

— Microsoft, Software Asset Management Best Practices | Source

The change that took effect on November 1, 2025, concerns the elimination of so-called tiered volume-discount pricing for Online Services (Microsoft 365, Azure, Dynamics 365 Online). The traditional model assumed pricing levels:

  • Level A — list price for organizations with fewer licenses
  • Level B — ~5-8% discount for medium organizations
  • Level C — ~10-15% discount for large organizations
  • Level D — ~15-25% discount for the largest enterprise customers

Since November 2025, all organizations — regardless of size — pay Level A. A company employing 50,000 workers pays exactly the same for a Microsoft 365 E3 license as a company employing 500 people.

This is a fundamental change in pricing philosophy. Microsoft argues it levels the playing field and simplifies pricing structure. In practice, it means a significant value transfer from large customers to Microsoft — estimates suggest billions of dollars in additional annual revenue.

Importantly, the change affects Online Services, not traditional on-premises licenses. However, the trend toward cloud migration means that for most organizations, Online Services constitute a growing portion of the licensing portfolio.

What other pricing changes is Microsoft planning for 2026?

The elimination of volume discounts isn’t the only change. Microsoft has announced and partially implemented a series of modifications affecting costs:

Global price increase from July 1, 2026. Microsoft has announced price increases for selected products and regions. Details vary depending on the local market, but the trend is clearly upward.

5% increase for NCE subscriptions at renewal. New Commerce Experience (NCE) subscriptions with annual commitments that renew at the beginning of 2026 will be subject to an additional 5% fee. This is a penalty for “premature” renewal under the old pricing model.

Elimination of 30-day grace period from April 1, 2026. Until now, organizations that didn’t renew subscriptions on time had a 30-day grace period with free access to services. Starting April 2026, this safety net disappears. Unrenewed subscriptions must be immediately canceled or enter a paid Extended Service Term (EST) — month-to-month access at list price plus a 3% administrative fee.

Re-bundling Teams with Microsoft 365. After resolving regulatory issues in the EU, Microsoft is reincorporating Teams into Business Premium, E3, and E5 packages. For organizations that previously purchased Teams separately, this is potentially good news (fewer SKUs to manage). For those not using Teams, it’s a potential package cost increase.

Copilot Business at promotional price. Microsoft 365 Copilot for organizations up to 300 users is available at $21/user/month (instead of $30), with a promotion lowering the price to $18 until March 2026. This is part of Microsoft’s strategy accelerating AI adoption — but also a source of additional costs for organizations that succumb to pressure that “everyone already has Copilot.”

Why is Microsoft intensifying licensing audits right now?

Microsoft licensing audits aren’t new, but their intensity and aggressiveness has clearly increased in 2024-2025. The timing coincidence with the elimination of volume discounts isn’t accidental.

According to ITAM Research, the average financial impact of a software audit has increased to $3.4 million — from $2.6 million in 2022. For large enterprises, this number can exceed $10 million. Microsoft, alongside Oracle and SAP, is among the most active auditors.

Reasons for increased audits:

Compensating for lost revenue. Traditional Microsoft licensing revenue growth is slowing (the market is saturated). Audits allow “discovering” under-licensing and generating additional revenue from the existing customer base.

Forcing cloud migration. Microsoft prefers the subscription model (predictable, recurring revenue) over traditional perpetual licenses. On-premises audits often end with a recommendation to migrate to Microsoft 365 — where usage tracking is automatic.

Exploiting licensing complexity. Microsoft licensing models are notoriously complicated. Different products, different metrics (per user, per device, per core), different usage rights in different programs. This complexity means almost every organization is non-compliant somewhere — even unknowingly.

AI and automation enforcement. Microsoft has increasingly better tools for detecting potential under-licensing — telemetry from cloud products, usage pattern analysis, comparison with purchased entitlements. A “friendly license review” often precedes a formal audit.

What are the most common non-compliance areas detected in Microsoft audits?

Understanding typical risk areas enables proactive action. Based on ARDURA’s experience and industry reports, the most common findings in Microsoft audits include:

1. Under-licensed Office/Microsoft 365 installations. Users install Office on more devices than the license permits. Microsoft 365 allows 5 installations per user, but many organizations don’t monitor this limit.

2. Server licensing gaps. Windows Server and SQL Server licensed per core are particularly problematic in virtual environments. Licensing requires covering all physical cores of the host where VMs can run — not just those currently in use.

3. Hybrid cloud environments. BYOL (Bring Your Own License) to Azure has specific requirements. Licenses purchased under one program may not qualify for cloud use. Many organizations assume “I have a license, so I can use it anywhere” — which is often untrue.

4. Software Assurance expiration. Some rights (e.g., Azure use, downgrade rights) require active Software Assurance. When SA expires, these rights disappear — but organizations often forget about this.

5. Developer and test environments. MSDN/Visual Studio subscriptions have strict usage limitations (development and testing only, not production). Production use requires separate licenses.

6. Outsourced users. External workers (contractors, outsourcing) using organization systems need licenses. Many companies “forget” about these users in counting.

7. Dynamics 365 and Power Platform. Complicated licensing models (named user vs team member, per app vs per capacity) generate frequent errors. Power Apps/Power Automate used beyond “seeded” limits require additional licenses.

How to prepare for a Microsoft audit — proactively, not reactively?

Organizations that pass through audits without significant additional payments treat compliance as a continuous process, not a one-time event. Here’s a framework for proactive preparation:

Step 1: Entitlements inventory. Gather all purchase documents: EA/MPSA agreements, purchase confirmations, invoices. Build a central database of what the organization has purchased and under what terms. For many companies, this alone is a challenge — documentation is scattered between procurement, IT, finance, and archives.

Step 2: Deployment discovery. Use tools to automatically detect installed Microsoft software. Microsoft Assessment and Planning Toolkit (MAP), third-party SAM tools (Flexera, Snow, ServiceNow), PowerShell scripts for cloud environments. The goal is a complete picture of what’s actually in use.

Step 3: Reconciliation. Compare entitlements with deployment. Where are the gaps? Where is excess? Which licenses are underutilized? This exercise often reveals both risk areas (under-licensing) and savings opportunities (unused licenses).

Step 4: Remediation plan. For identified gaps, prepare a remediation plan: purchasing additional licenses, uninstalling unused software, migrating to appropriate SKUs. Prioritize by risk and cost.

Step 5: Continuous process. Compliance isn’t a state but a process. Changes in the organization (new employees, new projects, M&A) continuously affect the licensing profile. Regular (quarterly) reviews catch drift before an audit.

At ARDURA, we recommend clients conduct a “mock audit” — an audit simulation by an internal team or external consultant — before a potential Microsoft audit. This allows detecting and fixing problems on your own terms, not under auditor pressure.

What cost optimization strategies remain available after discount elimination?

The elimination of volume discounts doesn’t mean organizations are helpless. Optimization strategies are evolving, but still exist:

1. License right-sizing. Many organizations have “excess” licenses — users with E5 who need E3, licenses assigned to inactive accounts, double licensing. Usage audit and SKU adjustment to actual needs can bring 10-20% savings.

2. Alternative licensing programs. CSP (Cloud Solution Provider) may offer better terms for some organizations than EA. Comparing options before renewal is key.

3. Non-standard terms negotiations. Despite the elimination of volume discounts, Microsoft still negotiates individual terms with the largest customers. Custom agreements, extended payment terms, migration credits — everything is potentially on the table.

4. Renewal timing. Price increases have specific effective dates. Strategic planning of renewal dates allows avoiding worst-case scenarios (e.g., renewal a week after a price increase).

5. Hybrid deployment models. Not everything needs to be in Microsoft cloud. For some workloads, on-premises or alternative cloud providers may be more economical — especially considering Microsoft’s new prices.

6. Using competitive pressure. Google Workspace, Zoho, open-source alternatives — Microsoft isn’t the only option. Even if the organization doesn’t plan migration, demonstrating willingness to consider alternatives can strengthen negotiating position.

7. Professional SAM support. Software Asset Management specialists often identify savings and risks invisible to internal teams. Consultant costs pay for themselves many times over in avoided overpayments and audit penalties.

How do Dynamics 365 and Power Platform fit into 2026 licensing changes?

Dynamics 365 and Power Platform are areas of particular Microsoft attention regarding compliance — and sources of significant changes in 2026.

Dynamics 365 License Validation from January 2026. Microsoft has announced that from January 15, 2026, it will begin enforcing license validation for Dynamics 365 Finance & Operations. This means the system will automatically check whether users have appropriate licenses assigned for their actions. If a user has permissions exceeding their license scope, the organization may incur additional costs or compliance risk.

This change signals a broader trend — Microsoft is moving toward automatic license enforcement, not just reporting. The traditional model of “buy licenses based on estimates, Microsoft will check in an audit” is giving way to “the system enforces compliance in real-time.”

Power Platform seeded entitlements. Microsoft 365 and Dynamics 365 licenses include “seeded” entitlements for Power Apps and Power Automate, but in limited scope. Using premium connectors, custom connectors, or exceeding API limits requires standalone Power Platform licenses. Many organizations are unaware of these limits — until an audit.

AI Builder and Copilot in Dynamics. AI features in Dynamics 365 require separate entitlements or consume “AI capacity” (consumption-based model). Organizations experimenting with AI features may be surprised by additional costs.

What role does Software Asset Management play in the new licensing reality?

In an environment of rising costs and intensifying audits, professional Software Asset Management is no longer “nice to have” and becomes a critical business function.

Visibility as foundation. You can’t optimize what you can’t see. SAM provides a complete picture of the license portfolio — what was purchased, what’s installed, what’s being used, where gaps and excesses exist. Without this visibility, renewal decisions are made blindly.

Proactive risk management. SAM identifies non-compliance areas before auditors do. Self-remediation is always cheaper than audit-forced remediation (often with penalties and interest).

Cost optimization. A typical SAM implementation identifies 20-30% potential savings in the licensing portfolio — through waste elimination, right-sizing, renegotiations. At large enterprise scale, that’s millions annually.

Negotiation support. SAM provides data for vendor negotiations. Instead of “we need X licenses because IT says so,” procurement can argue: “Our actual usage is Y, we have excess Z, we expect pricing that reflects these facts.”

Compliance automation. SAM tools like Flexera One automate license reconciliation with deployment, generate compliance-ready reports, alert on drift. This transforms compliance from a project into a process.

At ARDURA, we combine SAM technology (Flexera One implementations) with licensing expertise. Our teams help clients not only build visibility but also interpret complex Microsoft licensing models and develop optimization strategies.

How to prepare an IT budget for Microsoft licensing changes in 2026?

For CFOs and CIOs planning IT budgets, Microsoft changes require revising assumptions:

1. Eliminate the assumption of stable licensing costs. The historical practice of “EA renewal +2-3% annually” no longer applies. Plan scenarios with 15-25% Microsoft cloud licensing cost increases.

2. Budget an audit reserve. If the organization hasn’t conducted a comprehensive SAM assessment, there’s risk of audit findings. A 10-15% licensing budget reserve for “unexpected” expenses is prudent.

3. Include AI feature costs. Copilot, AI Builder, Azure OpenAI — AI features are aggressively promoted by Microsoft and have additional costs. Even if the organization doesn’t plan adoption, pressure may be strong.

4. Consider alternatives. Do all workloads need to be on Microsoft? For some use cases, Google Workspace, open-source alternatives, or multi-cloud strategy may be more economical.

5. Invest in SAM. The cost of professional SAM (tools + expertise) typically pays for itself many times over in savings and avoided penalties. It’s an investment, not a cost.

6. Plan negotiations in advance. EA renewals shouldn’t be managed reactively at the last minute. 12-18 months before expiration is the time to prepare strategy, gather data, identify leverage points.

Are there Microsoft alternatives worth considering?

Dependence on a single vendor (vendor lock-in) is risky — especially when that vendor unilaterally changes pricing terms. Considering alternatives is sensible, even if full migration isn’t planned.

Google Workspace — alternative to Microsoft 365. Competitively priced, especially for organizations without legacy systems requiring Office compatibility. Challenges: less functionality in advanced scenarios, integrations with Microsoft ecosystem.

Zoho Workplace, Zimbra — alternatives for smaller organizations. Significantly lower costs, but also smaller scale and ecosystem.

Open-source office suites (LibreOffice, OnlyOffice) — for organizations with less demanding use cases. Zero licensing costs, but require self-hosting or third-party SaaS.

Multi-cloud strategy for Azure — AWS, GCP offer comparable services, often with competitive pricing. For new workloads, considering alternatives from the start eliminates lock-in.

Hybrid approach — critical systems on Microsoft (where ecosystem and integrations are key), less critical on alternatives. This requires managing complexity but reduces exposure to Microsoft price changes.

Realistically, for most large organizations, full migration from Microsoft is impractical (too high switching costs, too deep integration). But having a realistic alternative — and demonstrating it in negotiations — strengthens bargaining position.

Strategic table: Checklist for Microsoft audit preparation and cost optimization

AreaActionStatusPriorityDeadline
INVENTORY
Gather all EA/MPSA/CSP agreements☐Critical_________
Identify all purchase records☐Critical_________
Map Software Assurance expiration dates☐High_________
DISCOVERY
Deploy inventory tool (MAP, Flexera, Snow)☐Critical_________
Scan all endpoints (physical, virtual, cloud)☐Critical_________
Discovery Azure/M365 subscriptions and usage☐Critical_________
Inventory Dynamics 365 users and roles☐High_________
RECONCILIATION
Compare entitlements vs deployment☐Critical_________
Identify gaps (under-licensing)☐Critical_________
Identify waste (unused licenses)☐High_________
Analyze utilization (active vs inactive users)☐High_________
REMEDIATION
Remediation plan for gaps☐Critical_________
Reclaim/reassign unused licenses☐High_________
Right-sizing SKU (E5→E3, standalone→bundle)☐High_________
GOVERNANCE
Establish license onboarding/offboarding process☐Medium_________
Quarterly compliance review☐Medium_________
Ownership and accountability for SAM☐High_________
NEGOTIATIONS
Identify EA/MPSA renewal dates☐High_________
Prepare negotiation data (min. 12 mo. before renewal)☐High_________
Evaluate alternatives (Google, AWS, hybrid)☐Medium_________
BUDGET
Reserve for price increases (15-25%)☐Critical_________
Reserve for remediation/audit findings (10-15%)☐High_________
Budget for SAM tools/consulting☐High_________

Scoring: Count how many checkboxes are checked. <50%: High audit risk, urgent action needed. 50-75%: Moderate risk, structural gaps to address. >75%: Good position, focus on continuous improvement.

How does ARDURA Consulting support organizations in managing Microsoft licenses?

ARDURA Consulting offers comprehensive Software Asset Management support with particular focus on Microsoft products:

License Assessment — comprehensive review of the organization’s licensing position. We identify gaps, waste, risk areas, and potential savings. The report provides actionable recommendations and action prioritization.

Flexera One Implementation — implementation of the leading SAM platform automating inventory, reconciliation, and compliance reporting. Flexera One integrates with Microsoft tools and provides the visibility needed for conscious license management.

Audit Defense — support when receiving Microsoft audit notification. We help prepare responses, negotiate with auditors, and minimize exposure.

Negotiation Support — strategic support during EA/MPSA renewals. We provide data, prepare argumentation, and support negotiations with Microsoft or partners.

Ongoing SAM Services — continuous license management as a service. Compliance monitoring, optimization, reporting — without the need to build an internal SAM team.

Our experience with over 32 clients in Europe and the Middle East includes organizations of every size — from mid-market to global enterprises with tens of thousands of Microsoft licenses.

Summary: The new licensing reality requires a new approach

Microsoft licensing changes taking effect in 2025-2026 mean a fundamental change in the rules of the game. Elimination of volume discounts, upcoming price increases, automatic enforcement, and intensified audits create an environment where passive license management is a recipe for financial disaster.

Key takeaways:

  1. Volume discounts are history. Since November 2025, everyone pays list prices. Large organizations lose the pricing advantage they had for years.

  2. More price increases are coming. July 2026 will bring a global price correction. Budget planning must account for 15-25% potential cost increases.

  3. Audits are intensifying. Average audit finding cost is $3.4M. Microsoft has increasingly better tools for detecting non-compliance.

  4. Dynamics 365 enforcement from January 2026. Automatic license validation means the end of the “gray zone” in D365 licensing.

  5. Proactive SAM is a necessity, not an option. Visibility, optimization, compliance — without professional license management, organizations are blind to risk and losing money.

  6. Negotiations require data. Without hard data on actual usage, the organization is in a weak negotiating position with Microsoft.

If your organization is facing Microsoft agreement renewal, struggling with compliance, or wants to optimize licensing costs — contact ARDURA. Our Software Asset Management experts will help diagnose the situation, identify savings, and prepare a strategy for the new licensing reality.

The time for a passive approach to Microsoft licenses has ended. Organizations that invest in SAM today will be in a better position tomorrow — financially and compliance-wise.