Renewing your Microsoft Enterprise Agreement (EA) can be a complex and time-consuming process. However, with strategic planning and a clear negotiation approach, you can significantly reduce the cost of your Microsoft Enterprise Agreement.
In this guide, we'll explore key strategies to help you achieve a more favorable outcome during your Microsoft Enterprise Agreement renewal, including the use of software contract price benchmarking to ensure you're getting the best possible terms.
Key Strategies to Reduce the Cost of Your Microsoft Enterprise Agreement:
Understand the importance of timing
Microsoft operates on a fiscal year ending June 30, which can be leveraged to your advantage during negotiations. To reduce the cost of your Microsoft Enterprise Agreement, align your renewal discussions with this period. Microsoft is more likely to offer concessions to meet their year-end targets. Start your renewal preparations 12-18 months in advance to ensure you have ample time for a thorough review and negotiation.
Assess current and future usage
One of the most effective ways to reduce the cost of your Microsoft Enterprise Agreement is by conducting a detailed audit of your current product usage. Make sure you're only paying for services you actually need and use. Evaluate your future growth and technology needs carefully; purchasing a few extra licenses could push you into a more favorable discount level. Understanding Microsoft's discount structure (from levels A to D) is crucial in this step.
Discount Level | Users/Devices | Discount Range |
Level A | 500 to 2399 | 10% to 20% |
Level B | 2400 to 5999 | 15% to 30% |
Level C | 6000 to 14999 | 30% to 40% |
Level D | from 15000 | 35% to 50% |
Microsoft Enterprise Discount Levels
Determine if E3 or E5 licenses suit your needs
Decide early on if transitioning to E5 licenses is necessary for your organisation. Microsoft often provides significant discounts as an incentive to move to E5, especially during the deployment phase. However, these discounts may not be as generous during renewal. To avoid higher costs, consider purchasing E3 with add-ons if you're not ready for a full move to E5. Remember, the more Microsoft products you adopt, the harder it may become to negotiate better terms in the future.
Beware of declining discounts
Declining discounts are a common tactic Microsoft uses, offering higher discounts in the first year and reducing them in subsequent years. This can set an unfavourable precedent for future renewals where the last year discount is low. It is almost always better to try to negotiate a more even discount across the years. This strategy provides a better starting point for the renewal negotiation.
Leverage Technology Contract Benchmarking
To negotiate effectively, it's essential to know what other organisations are paying. software contract price benchmarking offers valuable insights into the discounts and pricing structures other companies of similar size have received from Microsoft. This information gives you a powerful negotiating tool, allowing you to push for better discounts and terms based on market standards.
Negotiate a future pricing table
Agree on a future pricing table for true-ups and additional licenses at the start of the agreement. This is a critical step to reduce the cost of your Microsoft Enterprise Agreement over time. Without a pre-agreed pricing structure, you might end up paying premium rates for additional licenses. If you're planning a significant purchase, consider negotiating one-time pricing, which may be more favourable than the Enterprise Agreement terms.
Leverage competitive alternatives
While Microsoft is a dominant player in the market, they are not the only option. To reduce the cost of your Microsoft Enterprise Agreement, research competitive products and demonstrate viable alternatives during negotiations. Highlighting the potential to switch can motivate Microsoft to offer more favourable terms, especially when competitors present lucrative offers.
Question the ROI
If certain licenses within your Microsoft Enterprise Agreement aren't delivering clear benefits, question their return on investment (ROI). Use this as leverage to renegotiate terms or consider downgrading from E5 to E3 if the value isn't apparent. Reducing unused or underutilised licenses is a direct way to reduce the cost of your Microsoft Enterprise Agreement.
Escalate for additional concessions
Understand the different levels of discount authority within Microsoft's sales hierarchy. By presenting a well-structured case for additional concessions, you can push for discounts beyond what the initial sales team offers. Knowing when and how to escalate your request can be a decisive factor in reducing the cost of your Microsoft Enterpise Agreement.
Conclusion
Reducing the cost of your Microsoft Enterprise Agreement renewal is achievable with careful planning, strategic negotiation, and the right tools. By understanding Microsoft's pricing structure, assessing your actual needs, leveraging competitive alternatives, and utilising software contract price benchmarking, you can position yourself for a more favorable outcome and ensure you’re not overpaying for services.
If you need assistance in reducing the cost of your Microsoft Enterprise Agreement, we offer comprehensive support, from Technology Contract Benchmarking to negotiation strategy and execution. Our goal is to ensure you get the right level of discounts and business terms tailored to your organisation's needs.
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