The Directions on Microsoft Briefing Podcast

Episode: Microsoft Licensing and Negotiation: A Year in Review
Host: Mary Jo Foley
Guest: Dean Bedwell, Microsoft Licensing Expert
Date: December 22, 2025

Episode Overview

This episode delivers a comprehensive retrospective on major changes and persistent trends in Microsoft licensing and negotiation throughout 2025. Host Mary Jo Foley and guest Dean Bedwell—an industry insider with deep experience from both Microsoft and consultancy—break down what mattered most to enterprise customers, with practical insights into which organizations have leverage, strategies for negotiation, and how recent Microsoft policy shifts are reshaping agreements, product pricing, and discounts.

Key Discussion Points & Insights

1. Who Has Leverage in Microsoft Licensing Negotiations?

[02:12]

• Negotiation power is not only about size; iconic brands, high revenue generation, and active Azure or E5 deployments are key.
• Microsoft is still willing to negotiate, but the "why" matters: brand strength, Microsoft’s revenue needs, competitive alternatives, adoption of flagship products like Security Copilot or Azure.
• Quote:

  "Size is actually not the main factor. Large and small customers can still negotiate... Are you an iconic brand? Does Microsoft need the revenue? Are you using more Azure, more Microsoft E5?... Knowledge is truly power."
  — Dean Bedwell [02:12]

2. The Critical Role of Competitive Alternatives

[03:56]

• Threatening to move to AWS, Google Workspace, or other platforms only works if it’s actionable—empty threats are ineffective.
• Proof of intent (pilot projects, RFIs/RFPs, migration plans) makes alternatives credible in the eyes of Microsoft.
• Microsoft cares most about competition in critical product groups (Azure, Security Copilot, Power Platform, Power BI, CRM).
• Quote:

  "A veiled threat of 'I'm moving to AWS or Google Cloud' just doesn't work... You need to do things like start a pilot, do an RFI, let that competitor and Microsoft win... It can't just be some small little technology. It has to be something that's important to Microsoft."
  — Dean Bedwell [03:56]

3. Length of Contracts: Is Longer Better?

[06:00]

• Longer-term contracts lock in pricing, typically for three years, sometimes extendable for another three years (but with some negotiation caveats).
• Five-year terms are increasingly available, especially when transitioning to significantly higher-priced SKUs (e.g., M365 E5).
• Microsoft Customer Agreements (MCAs) complicate term management: they can be "evergreen" but with variable end dates across products.
• Quote:

  "When you're transitioning to higher level SKUs... Microsoft may offer a non-standard term. Five years is becoming more common and it seems that Microsoft sellers can do this without significant management... The basic of doing longer term contracts is absolutely important because it does fix pricing for you."
  — Dean Bedwell [06:00]

4. Discounting Copilot—A Changing Landscape

[08:13]

• Initial Copilot discounts were minimal—single digits—but now deeper discounts (35-40%) are possible, similar to Microsoft 365.
• The product is still maturing; Microsoft is discounting to spur adoption and larger deployments.
• Quote:

  "Right now, Microsoft may discount Copilot similar to Microsoft 365. And it would be prudent for customers to think about asking for discounts for Copilot that are in the range of 35 to 40%. That might be more realistic."
  — Dean Bedwell [08:55]

5. Volume Discount Elimination—A Watch-Out for 2026

(Host—context, not content-specific, included for relevance)

• As of November 1, 2025, Microsoft has eliminated tiered volume discounts for online services in the EA and MCA—a potential 6-12% price increase for core cloud services.

6. Discount Trends for Other Products

[11:45]

• E5, Azure, and Copilot retain negotiable discounts; Power BI, Dynamics, Power Platform get some.
• SQL Server and Windows Server discounts are now rare or limited to low single digits, no matter customer size.
• Quote:

  "Discounting on traditional products like SQL Server and Windows Server are being offered and regardless of the size of the customer are being offered limited discounts. In most cases, customers should expect discounts... to be either non-existent or low single digits."
  — Dean Bedwell [12:10]

7. Deployment Beats Commitment—What's Most Important to Microsoft

[12:55]

• Actual deployments (usage) of Microsoft products, not just purchase commitments, drive sales team incentives.
• Deals can be contingent on real deployment; “no deployment, no discount”.
• Quote:

  "Deployments are really the king at Microsoft right now... It's not what you've purchased, it's what you've deployed... Microsoft may even ask that you put an amendment together to lock in deployments and may even say 'no deployment, no discount.'"
  — Dean Bedwell [12:55]

8. The EA vs. MCA Debate—Is the Enterprise Agreement Dead?

[14:27]

• EAs are still being signed and renewed, but the MCA is Microsoft’s future focus.
• For many, especially smaller organizations, the MCA may soon be their only option (especially if self-service/no rep is required).
• Over time, most customers are expected to transition to the MCA as their core contract vehicle.
• Quote:

  "Is the enterprise agreement dead? ...The arrow's been fired. The future is the Microsoft Customer Agreement... EAs are still being signed... but it appears the MCA is the future."
  — Dean Bedwell [14:27]

9. 2025’s Notable Licensing/Product Changes

[16:31]

• In 2025, Directions on Microsoft produced over 150 reports on licensing/product changes—39 just in the latest quarter.
• Essential topics: Purview Data Governance, Power BI Report Server Licensing, Azure Copilot agents, agent pricing options, Pay As You Go billing for Copilot, and the move from SQL Reporting Services to Power BI Reporting Server.
• Hardware needs can shift: new Copilot features may necessitate capital expenditures on compatible PC hardware.
• Quote:

  "Directions on Microsoft produces reports on product features, how to license them and the business impact... There are a number of ones that companies need to review on a regular basis so they could say what's the best way to move forward in my organization from a Microsoft perspective."
  — Dean Bedwell [17:23]

Notable Quotes & Memorable Moments

• "Knowledge is truly power." — Dean Bedwell [02:38], emphasizing the value of understanding Microsoft’s priorities and using that information in negotiations.
• "It's not what you've purchased, it's what you've deployed... Microsoft may even say no deployment, no discount." — Dean Bedwell [13:47], on how actual usage is now central to dealmaking.
• "The arrow's been fired. The future is the Microsoft Customer Agreement." — Dean Bedwell [14:36], signaling a historic contract transition.
• "Right now, Microsoft may discount Copilot... in the range of 35 to 40%." — Dean Bedwell [08:55], giving listeners a concrete discount target.

Important Timestamps

• [02:12] — What makes a company strong in Microsoft negotiating?
• [03:56] — The importance (and reality) of using competitive alternatives.
• [06:00] — How and why to seek longer-term contract pricing.
• [08:55] — Copilot discounting shifts: what's possible now.
• [11:45] — Which products are still being discounted—and which are not.
• [12:55] — Why Microsoft prioritizes deployment over purchase size.
• [14:27] — The future of Enterprise Agreements vs. Microsoft Customer Agreements.
• [16:31] — Must-see 2025 product and licensing changes and reports.

Resources & Next Steps

• For detailed product/licensing analysis, see Directions on Microsoft’s reports (covering Copilot, Azure, Power BI, Purview, and more).
• Consider Microsoft’s licensing and negotiation boot camps for up-to-date strategies in the evolving 2026 landscape.

This episode equips enterprise customers with actionable negotiation levers, awareness of critical Microsoft priorities, and up-to-the-moment trends in licensing—a valuable guide for anyone preparing for Microsoft renewals in 2026 and beyond.