Software licensing spent a long time as a relatively stable line item for many organizations. But with Microsoft’s recent moves, new pricing models, bundles, terms and regulatory-driven shifts, licensing has become a strategic lever, not just an operational expense. If you manage IT procurement, renewals, or vendor contracts for your business, understanding these shifts is essential.
In this article we’ll walk through (1) what has changed in the last few months, (2) what those changes mean for mid-market and enterprise buyers, and (3) what you should be preparing for in 2026.
What Has Changed: The Past Few Months
Uniform Pricing for Cloud/Online Services (Effective Nov 1, 2025)
One of the most consequential changes: Microsoft is eliminating tiered volume-discount pricing for its Online Services under large licensing programs like the Microsoft 365/Office 365/Online suite. Starting November 1, 2025, companies renewing or purchasing new online services under the Enterprise Agreement (EA) or Microsoft Products and Services Agreement (MPSA) will pay the same list price (Level A) regardless of size. (Microsoft)
For example, what used to be Level C or D discounts for large seat counts will disappear; all customers will shift to Level A pricing when their renewal hits. (fusionconnect.com) This applies to cloud/online services (e.g., Microsoft 365, Office 365, Dynamics 365), not on-premises perpetual licenses. (Microsoft)
New Suite Options With & Without Teams
In response to regulatory pressure and customer feedback (especially in Europe), Microsoft introduced licensing options: productivity suites with or without Teams included. Beginning November 1, 2025, suites without Teams are priced lower; meanwhile, the standalone “Teams Enterprise” product’s pricing increased. (Microsoft) That means you can buy, say, Microsoft 365 or Office 365 either bundled with Teams or opt for a version without Teams if you already cover collaboration another way — giving more flexibility (and potentially cost savings). (crayon.com)
Changes in Terms, Add-Ons & Product Terms
There have also been term-and-condition changes across Microsoft’s licensing ecosystem in 2025. For example:
Implications of Microsoft’s New Commerce Experience (NCE) & Renewal Risk
While not brand-new this moment, the renewed importance of licensing terms under the NCE model continues to significantly affect behavior. For instance: annual vs monthly term pricing differences, lock-in risk, and seat-reduction restrictions. A recent article noted that monthly term licenses cost ~20% more than annual, and certain premium services saw price increases (e.g., Power BI Pro, Teams Phone). (Ntiva)
What These Changes Mean for Buyers
Increased Urgency on Optimization
With discounts evaporating and uniform pricing becoming the norm, the levers for cost control shift from “negotiation of seat price” to “optimization of how many seats, what tier, how used.” When you can’t rely on tiered discounts, you must rely more heavily on alignment of license level to actual role and usage.
Renewal Risk & Budget Surprises
If your renewal hits after November 1, 2025 under EA or a similar agreement, you may face higher list prices simply because of the shift to Level A pricing. If your budget assumed previous lower price tiers (B–D), you’ll experience a cost increase without any change in headcount. (rixmind.com)
Flexibility and Role-Based Licensing Matter More
Because cost savings via volume discounts are reduced, there’s more benefit in segmenting licenses by role, usage, and business function — and ensuring seasonality, contract terms, user turnover are accounted for. The “with or without Teams” option gives further latitude to align license suites more tightly to actual collaboration needs rather than defaulting to broad, full-tier bundles.
Term Strategy is Critical
Given that annual vs monthly terms carry different cost structures and lock-in risk, buyers must plan ahead. Under NCE, seat reductions may only be possible at renewal in certain cases, and monthly rates can be significantly higher. (Ntiva) For organizations with fluctuating headcount (e.g., seasonal workers, contractors) this matters greatly.
Nonprofit, Education, & Special Licensing Need Review
If your organization qualifies under nonprofit or education, you should review changes to free-license grants or discount models. Also if you rely on add-ons or overlapping third-party tools, the changes in product terms and add-on prerequisites may expose inefficiencies.
3. What to Expect in 2026 and Beyond
Removal of Grace Periods & Extended Service Term (EST)
Sources indicate that from April 1, 2026, Microsoft will discontinue the free grace period for non-renewed CSP subscriptions. Instead, an “Extended Service Term (EST)” option will be available: customers may continue services at standard monthly rates (with a ~3% uplift) or cancel at any time with prorated billing. (LicenseQ)
Retirement of Legacy Products & Security-Suite Transition
Also noted for August 1, 2026: Microsoft plans to retire the legacy product Microsoft Defender Threat Intelligence (MDTI) and complete transition to free access for certain customers who adopt its newer solutions (e.g., Defender XDR, Sentinel) as part of security-suite realignment. (LicenseQ)
Continued Focus on AI, Data Sovereignty & Modular Licensing
Expect Microsoft to continue refining licensing around AI-enabled services (Copilot, Azure AI Foundry models), data-sovereignty deployments (e.g., Microsoft 365 Local), and more modular offerings (tier-by-capability rather than “all or nothing” suites). For example, changes to the Product Terms site already reflect more fine-grained definitions around AI services, external user rights, add-on prerequisites. (Microsoft)
Pricing Pressure, but Levers Shift
While volume-based discount models may be going away, licensing cost pressure will remain. The difference: cost savings will rely more on user-role alignment, usage monitoring, inactive seat reclamation, contract term strategy, and architecture (how many tenants, how many add-ons, overlapping tools). In other words: the “right-size your licensing” agenda becomes even more urgent.
More Regulation, Especially in Europe
Given regulatory scrutiny (as in the Europe-based licensing changes and bundling of Teams) the future may bring further constraints or offerings (e.g., separate licensing for Teams, or more choices for “without Teams” suites) or obligations for Microsoft. Buyers should monitor for regional variations and regulatory-driven changes. (For example, the decision to offer suites without Teams in response to European feedback.) (Microsoft)
4. What You Should Do Now to Prepare
Map Renewal Dates & Seat Counts
Identify all Microsoft contracts (EA, MPSA, CSP) and note renewal dates and current pricing tier. If renewal is after November 1, 2025 you may face higher list pricing.
Conduct a Comprehensive License Audit
Assess actual usage: how many seats are active, what features are used, who uses full-tier licenses, who uses minimal apps. This becomes especially important when large discounts vanish and you’ll pay full list price.
Segment Your User Base by Role
Create license personas aligned to roles (e.g., execs, knowledge workers, frontline, contractors) and match them to appropriate Microsoft license tiers (with/without Teams, with/without add-ons) rather than “everyone gets E5”.
Term Strategy: Annual vs Monthly
For stable headcount users, annual terms are generally more cost effective. For variable/seasonal users, monthly or shorter-term licensing may help avoid overspending. Given NCE constraints and increasing price differential, plan term strategy ahead.
Consider “Without Teams” Suites If You Already Cover Collaboration Elsewhere
If your organization uses a third-party collaboration tool (Zoom, Slack, etc) and only uses limited Teams functionality, the new “without Teams” suite option may deliver savings.
Reclaim Inactive or Orphaned Licenses
With fewer discount levers, reclaiming unused seats becomes a major savings driver. Ensure off-boarding workflows are tied to license reclamation and run periodic audits.
Review Your Add-On and Overlap Costs
With changes in product terms and add-on prerequisites, you may have legacy overlaps (e.g., buying third-party security when Microsoft includes equivalent capabilities). Audit tool stacks, remove redundancies and consolidate.
Engage Your CSP or Licensing Partner Early
Because the levers are shifting, working with an experienced CSP partner (or licensing advisor) can help you anticipate cost impact, model scenarios, and prepare for upcoming term changes (e.g., EST, product retirement). Early engagement gives you more flexibility.
Bottom Line
The licensing landscape for Microsoft services is evolving, and mid-market IT leaders need to treat it as a strategic area, not a routine renewal task. Over the past few months we’ve seen major structural changes: uniform pricing, suite-modularity (with/without Teams), updated terms and add-on rules, and new renewal/term models. Looking into 2026, new service term changes, product retirements, AI-driven licensing shifts and regulatory influences will further raise the stakes.
At TopSpin Tech, we help organizations navigate these shifts, ensuring your Microsoft licensing is aligned with real business usage, headcount dynamics, contract term strategy and overall IT operating model. If you’re renewing in the next 6-18 months (or simply want to proactively prepare), now is the time to act.
Contact us today to schedule a review and discover how right-sizing your Microsoft licenses can help you do more, with less.
Schedule a free consultation using the "book a meeting" at the top of this page