Microsoft has confirmed a major commercial change: this November, every organisation with more than 2,399 users will be affected. Regardless of how large your estate is, you will soon be paying the same per-user price for Microsoft 365, Office 365, and all other Online Services.
In simple terms, Microsoft is retiring the long-standing Level B/C/D discount structure.
In practical terms, this is the most significant shift in licensing strategy in a decade — and it reshapes the economics for virtually every enterprise customer.
What Exactly Is Changing
The adjustment covers all Online Services, including:
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Microsoft 365 (E3, E5, F-series)
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Office 365
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Enterprise Mobility + Security
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Power Platform (partially)
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And other cloud-based SKUs under Enterprise Agreements
Corporate customers have long operated on a very familiar rule: the more users you have, the lower the price. Sensible, predictable, and commercially logical.
Microsoft is removing this logic entirely.
The New Price Uplifts
| User Count | Increase |
|---|---|
| 2,400–5,999 | +6% |
| 6,000–14,999 | +9% |
| 15,000+ | +12% |
Why this oddly specific staircase?
Because these brackets correspond to the legacy Volume Levels:
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Level B
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Level C
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Level D
All three are being discontinued. Everyone moves to a single, flat, undiscounted price.
Large enterprises — particularly Level D customers — lose the most.
Real-World Impact
A company with 25,000 users on E5 will now lose its Level D pricing, which translates to:
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an uplift of around 12%, and
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approximately $2 million in additional annual spend.
This is not theoretical modelling; this is the straightforward removal of the largest volume discount.
Microsoft already tested this approach with Copilot licensing, where all customers paid the same price regardless of size. It worked. And now the same model is being rolled out across Online Services.
Why Microsoft Is Doing This Now
There are several strategic drivers behind the shift:
1. Commercial Simplification
EA pricing has become overly complex, with variations across regions, sectors, and historical agreements. Microsoft is consolidating it into one global framework.
2. A Move from “Volume Value” to “Functional Value”
Microsoft’s message is clear:
The value of M365 is in the functionality, not in the number of users consuming it.
3. Alignment with the AI-Based Licensing Model
With new AI add-ons (such as Copilot for M365), Microsoft needs clean, consistent price baselines.
The fewer exceptions, the better for their long-term model.
How CIOs, CFOs and IT Directors Should Respond
You can’t avoid the increase — but you can manage its impact.
1. Perform a detailed licence optimisation exercise
Many organisations are now revisiting their licensing assumptions:
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Moving users from E5 to E3 when advanced security features aren’t fully utilised
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Removing unused “orphaned” licences
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Rebalancing F-series and frontline roles
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Cleaning up Power Platform entitlements
Most enterprises overspend 5–18% purely due to underutilisation.
2. Prepare for negotiations early
Discounts will still exist — but:
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they will no longer be volume-based,
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they will be smaller, and
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the negotiation space will narrow year-on-year.
Microsoft is standardising the model; flexibility is reducing.
3. Reassess who truly needs premium SKUs
Key questions to review:
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Does every E5 user actually benefit from E5-level features?
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Can a portion of the organisation move to E3 without compromising security posture?
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Are we licensing according to function, or out of habit?
Even a partial step-down can offset the entire price increase.
4. Build an internal M365 “Value Matrix”
Many organisations subscribe to E5 simply because:
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“We’ve always had it.”
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“It’s easier.”
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“It’s the standard.”
But with the new model, assumptions won’t cut it.
You need:
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a functional audit,
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a role-to-feature mapping,
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and a clear ROI view on Defender, Purview, Teams, and other components.
This is what underpins a successful negotiation.
5. Think in 3- to 5-year cycles
Discounts can be secured, but Microsoft will be tightening them gradually.
The real question becomes:
How do we build a long-term licensing strategy that protects the budget as the model evolves?
Who Will Feel the Pain the Most
1. Organisations with 20,000+ seats
They lose the deepest discount tier.
2. Enterprises running full E5 estates
Especially where E5 was deployed “by default”.
3. Companies heavily reliant on Microsoft’s all-in-one cloud stack
The fewer alternatives they have, the lower their negotiating leverage.
Who Might Actually Benefit
There is a silver lining.
Small and mid-sized organisations previously stuck on Level A/B now find themselves on equal footing with the largest global enterprises.
This is a step towards a flatter, more transparent pricing model.
What You Should Do Immediately
1. Conduct a full licence usage audit
You’ll often uncover 10–15% savings instantly.
2. Begin renewal preparation 3–4 months in advance
You need time for modelling, internal alignment, and negotiation strategy.
3. Define alternative scenarios (E5->E3, mixed licensing, frontline models)
4. Build a three-year financial forecast with all uplifts included
5. Open discussions with Microsoft and your partner early
Leaving it to the last quarter is a guaranteed way to lose leverage.
How We Can Support You
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Comprehensive licensing audits
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Cost-optimisation modelling
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Role-based M365/E5 licence rationalisation
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Renewal strategy and negotiation support
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Long-term planning aligned with your financial and security requirements
The goal isn’t merely to “survive the uplift”.
It’s to build a model where Microsoft supports your business strategy — not dictates it.
rgds,
Alex