How to Maximize Value in Microsoft Contract Negotiation

Different Microsoft licenses offer a ton of powerful and varied benefits. But understanding them can be complex. You need to know what works best for your company so you spend your budget wisely and get access to all the features you need.

Each license type serves a specific purpose. Some offer flexibility, while others focus on security and compliance. The right contract negotiation strategy can save you money and boost efficiency, but you need to approach it right.

This article will guide you through the main types of Microsoft licenses and how to maximize value when agreeing on a new contract.

Some Key Microsoft License Types to Be Aware Of

Microsoft has a ton of excellent products and licenses. Let’s take a quick look at some of the most common and widely-used ones.

Microsoft 365 Business Basic

This license provides essential cloud services like email and online Office apps. It’s ideal for businesses that need cost-effective, entry-level tools for communication and collaboration.

Microsoft 365 Business Standard

This license offers essential productivity tools for small to medium-sized businesses including the ability to work offline. It’s crucial for companies that need a reliable solution to enhance collaboration.

Office 365 E3

E3 provides advanced security and compliance features. It's important for businesses requiring robust protection and efficient management of their digital environment.

Office 365 E5

E5 includes everything in E3 plus additional analytics and security capabilities. Businesses should care because it offers comprehensive tools for data-driven decision-making and heightened security.

Windows Server Standard

This license is essential for businesses that require a solid foundation for running applications. It's key for companies with moderate virtualization needs.

Windows Server Datacenter

Designed for businesses with high-density virtualization requirements, this license is made for organizations looking to maximize their server resources.

5 Ways to Maximize Value in Microsoft Contract Negotiation

Let’s explore some of the ways you can get more value when negotiating Microsoft contracts, so you can save money while accessing even more powerful tools and features.

Bundle other Microsoft services with licenses for better pricing

It’s often possible to get more value out of your contract negotiation by bundling other services into your contract alongside the initial license. Here’s how:

Identify other Microsoft services your business uses, such as Azure or Dynamics 365.
Evaluate how these services integrate with your current setup. Look for opportunities to bring them together.
Approach your Microsoft representative and express interest in bundling these services with your chosen licenses.
Make a case for the benefits of bundling. Emphasize the long-term commitment and value this provides to Microsoft.
Request a pricing proposal that reflects a bundled discount. Push for additional concessions based on the volume and duration of the contract.
Review the proposed pricing carefully. Ensure the bundled offer provides significant savings compared to purchasing services separately.
Finalize the deal. Confirm that all negotiated terms are clearly documented in the contract.
Implement the bundled services efficiently. Make sure your team is trained to maximize their use and integration with existing systems.
Monitor the cost savings over time and adjust the bundle as needed to align with your changing needs.

Many companies consolidate their IT solutions this way. Let’s assume a company is purchasing a Microsoft 365 E5 license — by bundling services like Azure, Dynamics 365, and Power BI with their E5 licenses, businesses can gain significant cost reductions and streamlined management.

Pro tip: Microsoft typically offers predefined bundles (e.g., Microsoft 365 Business Premium) that may already include certain combinations of services. It's essential to understand what's included in existing bundles to avoid redundant purchases.

Leverage your existing relationship with Microsoft for loyalty discounts

If you already have a good customer relationship with Microsoft, you can tap into this goodwill to negotiate a discount based on loyalty.

Start by identifying the key Microsoft account manager you’ve worked with. Ensure they understand your long-term value to Microsoft.
Set up a direct conversation with your Microsoft representative. Highlight the history of your partnership and be sure to emphasize your loyalty and consistent use of their products.
Discuss your future plans to continue using Microsoft services. This signals ongoing commitment, which can be leveraged for better terms.
Request a detailed review of your current licenses. Use this to pinpoint where loyalty discounts could apply or where you might benefit from additional services at a reduced cost.
Negotiate firmly. Use your loyalty and volume of business as leverage to secure discounts or other financial incentives. Document all agreed-upon terms clearly to avoid misunderstandings.

Lots of companies have successfully used their long-term partnerships to negotiate better pricing on services like Microsoft 365 and Azure. By consistently renewing contracts and showing commitment to using Microsoft's ecosystem, these businesses were able to secure more favorable terms, such as reduced licensing costs and additional support benefits.

Pro tip: Microsoft has structured programs for discounts based on volume and commitment, such as Enterprise Agreements. While loyalty can play a role, formal discount programs typically guide pricing. So, be aware of that before you start negotiating.

Negotiate multi-year agreements to lock in favorable rates

If you can commit to a multi-year agreement on your Microsoft contract, it’s often possible to get more favorable rates than shorter contracts.

Start by evaluating your current and future needs for Microsoft services. This will help you determine the scope of the agreement.
Approach your Microsoft account manager. Express your interest in a multi-year agreement to stabilize your costs.
Request detailed pricing for different contract lengths. Compare the savings for two, three, or five-year agreements.
Highlight your commitment to Microsoft’s ecosystem. Use this as leverage to negotiate better rates and additional perks.
Lock in the rates by finalizing a multi-year agreement. Make sure the terms protect you from potential price increases during the contract period.
Review and document all terms carefully. Confirm that the agreement includes flexibility for future scaling or adjustments to your service usage.

Request custom terms that align with your business needs

Generally speaking, a contract agreement that’s tailored to your specific needs, goals, and circumstances is always better value than a one-size-fits-all solution. Here’s how to negotiate custom terms:

Start by identifying your business's specific operational needs. Find out where standard contract terms may not fully align with your objectives.
Communicate these needs clearly to your Microsoft representative. Make it clear that flexibility is crucial for your business.
Request custom terms. This could include adjusted payment schedules, the ability to scale licenses up or down, or specific support levels tailored to your usage.
Negotiate these terms with a focus on how they will benefit both parties. Show how customizations will help optimize your use of Microsoft's services, ensuring a long-term partnership. You may also consult with some Microsoft Dynamics 365 consultants, in which they can provide expert guidance to tailor your licensing strategy to your specific needs.
Ensure all custom terms are clearly documented in the final contract. This prevents misunderstandings and makes it easier to enforce these terms as needed.

Pro tip: Achieving custom terms often depends on the size and influence of the organization, the overall value of the contract, and Microsoft's willingness to accommodate specific requests. Engage with knowledgeable partners or consultants specializing in Microsoft licensing to navigate complex negotiations effectively.

Use volume purchasing to gain additional discounts

Volume purchasing is where you negotiate discounts by purchasing multiple licenses or products at once. Here’s how to do it:

Start by analyzing your projected needs. Determine the volume of Microsoft licenses or services you plan to purchase over the next year.
Approach your Microsoft account manager with this volume projection. Emphasize that you are considering a bulk purchase.
Request detailed pricing for different volume tiers. Ask for discounts that scale with the volume of licenses you commit to purchasing.
Compare the savings between different purchase volumes, and check if the discount justifies the increased expenditure.
Finalize the purchase at the volume that offers the most value. Lock in the discounted rate by securing a long-term agreement that includes price protection.

This approach ensures you maximize cost efficiency by leveraging your purchasing power and is commonly used in lots of different industries. For example, volume purchasing is common in technology manufacturing, where businesses will place very large orders together to gain a discount.

Get More Out of Microsoft Contract Negotiation

Maximizing value from your Microsoft products requires a strategic touch. Focus on understanding the specific features of different license types so you can purchase the tools that fit your needs best, and use techniques like bundling and volume purchasing to secure better deals. You may also utilize the services of a Microsoft negotiation consultants to ensure your enterprise maximizes value in every Microsoft contract negotiation

By taking these steps, you can benefit from all the capabilities of Microsoft while controlling costs.

Stay proactive and adjust as your business evolves so that your investment continues to deliver high returns in both productivity and financial performance.