If you buy a single-installation Windows operating system, Office, or any other premium Microsoft applications, it’s delivered as a full-packaged product (FPP). The software installation media (CDs or DVDs), documentation such as user manual and disclaimers, and a license activation key are all included in the box. That’s pretty standard and straightforward. But licensing software applications and cloud services to enterprises gets a bit more complicated because it would be too expensive to buy FPPs for each user or device.
Microsoft Volume Licensing is the answer to licensing various software products to businesses and other organizations. Read on to learn how enterprise-based Microsoft Licensing works and the options available to your business.
What is Microsoft Volume Licensing?
This is a licensing service offered by Microsoft to organizations that need to purchase multiple licenses but do not require separate software media or the accompanying documentation with every license. Doing away with the media and documentation and making a bulk purchase lowers the cost per installation. Microsoft is also flexible on the user rights and the license agreement period depending on the number of users or devices.
Microsoft considers three main factors before selling Microsoft Volume Licensing:
- Size and type of the organization – This refers to the number of employees, business model, and size of IT infrastructure.
- The software products in question – Different products are obviously priced and bundled differently.
- The use-case scenario – How will the products be used, for how long, and by whom?
In essence, Microsoft Volume Licensing is tailored to each particular organization depending on its niche industry and business characteristics. The same products are licensed differently for small businesses, large firms, government agencies, non-profits and charitable organizations, software vendors, IT services providers, and learning institutions.
Perpetual vs. subscription licenses
There are generally two types of licensing models when it comes to software and IT service purchases. The first is a perpetual license, which is paid upfront in one lump sum. The license period typically runs between one and three years, although the vendor and client may agree on a suitable period. In addition to the lump sum, the client also pays a monthly or annual maintenance fee to cover ongoing customer support and occasional upgrades. Perpetual licenses are often discounted or tied to other benefits.
A subscription or non-perpetual license is renewed monthly or annually. The subscription price includes all maintenance, technical support, and upgrade fees. Subscription licenses break down the lifetime licensing cost into small manageable chunks spread out across multiple payments. This licensing model is relatively affordable and popular with most enterprises, especially start-ups and small businesses.
Microsoft offers both perpetual and subscription licenses. For most of its software and services, the customer actually selects the preferred licensing model.
Perpetual vs. Subscription Compared
| Perpetual License | Subscription License | |
|---|---|---|
| Initial Cost | Higher upfront cost | Lower upfront cost |
| Duration | Indefinite usage rights | Time-bound (e.g., monthly or annual renewal) |
| Software Assurance | May include or offered as an add-on | Typically included |
| Upgrades | Available with Software Assurance | Automatically entitled to upgrades |
| Financial Planning | Capital expenditure (CapEx) | Operating expense (OpEx) |
About Microsoft Software Assurance
Software Assurance from Microsoft helps your business take full advantage of its IT investment. You can leverage Software Assurance to optimize IT costs and investments through instructor-led training, access to exclusive technologies and license rights, on-demand support, and consultation-based IT planning. This is Microsoft’s unique way of adding value to your purchases by helping you unlock your IT’s potential.
Microsoft Volume Licensing for Small Businesses
The Microsoft Open Program caters to organizations with fewer than 250 devices or users. The program consists of three Microsoft Licensing options:
- Open Value Agreement: Three-year perpetual agreement designed for organizations seeking the advantages of Microsoft Software Assurance. It has a simple license management structured on annual payments.
- Open Value Subscription (OVS): Three-year subscription license that also includes Software Assurance. It’s optimal for organizations looking for a lower upfront cost and flexibility on an annual basis to accommodate user-count fluctuations.
- Open License Program (OLP): Two-year perpetual license with Software Assurance as a secondary purchase option. It’s ideal for organizations that want to start using the purchased software immediately upon sign-on.
Note: Starting in January 2022, commercial customers won’t be able to purchase or renew licenses and online services via the Open License Program. Instead, these transactions will have to go through Microsoft partners in the Cloud Solution Partner program.
Microsoft Volume Licensing for midsize and large businesses
Here’s a summary of the licensing options available to organizations with 250 or more users/devices:
- Select Plus: Perpetual agreement with optional three-year Software Assurance purchase. The licensing plan is designed for organizations wanting to maintain a mixed software environment while enjoying consistent discounts across the board.
- Microsoft Enterprise Agreement (EA): Three-year perpetual license that combines cloud-based and local services under a collective agreement. It allows organizations to standardize their IT platforms and optimize licensing costs. It also includes a comprehensive SA offering. By coupling EA with Enterprise Enrolment, you can license solution-based products such as Office 365 and Windows.
- Enterprise Agreement Subscription: The subscription version of the Microsoft Enterprise Agreement.
Comparison of Volume Licensing Programs:
| Program | Minimum Devices/Users | Agreement Term | Software Assurance | Payment Structure |
|---|---|---|---|---|
| Open Value | No minimum | 3 years | Optional | Annual |
| Open Value Subscription | No minimum | 3 years | Included | Annual, lower upfront cost |
| Open License Program | No minimum | 2 years | Optional (secondary purchase) | Upfront |
| Select Plus | No minimum | Perpetual, no fixed term | Optional | As needed |
| Microsoft Enterprise Agreement | 250+ | 3 years | Included | Annual |
| Enterprise Agreement Subscription | 250+ | 3 years | Included | Annual |
Microsoft Volume Licensing Pricing
When it comes to acquiring software for a business, understanding the pricing dynamics of licensing options is as critical as understanding the features and benefits. Microsoft Volume Licensing offers various programs tailored to the needs of different organizational sizes and types. However, figuring out the specifics of pricing within these programs can quickly become complex given the number of variables involved.
Factors Influencing Volume Licensing Prices
Pricing within Microsoft Volume Licensing is contingent upon several factors:
- Organization Size and Type: Pricing may vary depending on whether the organization is a small business, a large enterprise, a government entity, an educational institution, or a non-profit organization. Microsoft offers different pricing scales to accommodate the varied scope and scale of operations.
- Number of Licenses: The more licenses you purchase, the greater your economies of scale can be. Volume licensing is designed to reduce the cost per unit, making it a cost-effective option when you need multiple licenses for your team or throughout your organization.
- License Type: Depending on whether you opt for perpetual licenses, which are paid upfront and used indefinitely, or subscription licenses, which are paid on a recurring basis, pricing will differ. Subscription licenses generally offer the benefit of a lower initial cost.
- Software Assurance: Adding Software Assurance to a licensing agreement may increase the price but comes with benefits such as complimentary upgrades, support, and training resources.
Pricing Models
Here’s a closer look at the two primary pricing models available through Microsoft Volume Licensing:
- Perpetual Licensing: This model typically requires an upfront payment that grants indefinite use of the software. The cost could be substantial initially but may result in savings over time, especially if you keep the same software for several years without the need for upgrades.
- Subscription Licensing: This model involves ongoing payments, which can be monthly or annually, and includes maintenance, support, and upgrades within the subscription cost. This can ease cash flow and offer flexibility, as costs can often be adjusted if your organization’s needs change.
Calculating the Cost
Due to the variables involved, there is no one-size-fits-all pricing matrix that can be applied to every organization’s situation. Pricing can only be accurately determined through a consultation with a Microsoft representative or a licensed reseller who can consider your specific licensing needs, negotiation points, and eligibility for any discounts or special programs.
Helpful Resource: Use the Microsoft License Advisor tool to get a full quote that you can share with colleagues or your reseller.
Budget Consideration
For budgetary planning, it’s important to consider not only the up-front or recurring costs of licenses but also the total cost of ownership (TCO). This includes potential costs for ongoing support, training for IT staff and end-users, and upgrades over time.
Tips for Navigating Pricing
- Request a Quote: Always start by contacting a Microsoft representative or an authorized reseller to discuss your needs and request a detailed quote. Additionally, you can use the Microsoft License Advisor tool to receive a full quote.
- Explore Different Options: Compare the costs and benefits of different licensing programs to determine which is most cost-effective for your current and projected needs.
- Negotiate: As with many enterprise solutions, there may be room to negotiate on price. Consider your organization’s track record, future growth potential, and commitment level to negotiate favourable terms.
- Assess Value: Look beyond the sticker price and assess the overall value that a licensing agreement would bring to your organization, including any intangibles such as improved productivity or security.
Microsoft Products and Services Agreement (MPSA)
MPSA is a transactional license agreement between commercial, academic, and government organizations with 250 or more users and Microsoft (or any of its affiliates or partners). It’s designed for organizations that want to license Microsoft cloud services or on-prem software without a common non-expiring agreement. The agreement basically consolidates separately-licensed cloud services, Software Assurance, and software purchases.
Here is a list of the services and products covered by MPSA, along with detailed terms of the agreement.
Microsoft Services Provider License Agreement (SPLA)
SPLA provides a way to license Microsoft cloud and software products needed to host services and applications for a client’s customers, for instance, through Microsoft’s Cloud Solution Provider Program (CSP). It essentially provides rights to run a Microsoft-based hosting service, including Microsoft SQL Server and Windows Server, along with other benefits to third-party software and service vendors.
The Benefits of CSP
With the onset of COVID, companies have had to rapidly transform which means requiring the ability to scale to support a remote workforce. CSP (Cloud Service Provider) Licensing is designed to be more flexible than traditional licensing models by providing businesses more control and scalability over their licensing. CSP is a cloud subscription-based way to procure licenses, that is billed on a per-user, per-month pricing model. With CSP there are no annual or 3-year required commitments with the added benefit of having the ability to scale up or down monthly as necessary. EA (Enterprise Agreements) require a minimum of 500 users or devices, whereas CSP has no minimum requirement. CSP is designed to support hybrid environments with the ability to also sell perpetual-based Software that previously was only available on an EA, Open, or MPSA.
Softlanding also has Advanced Support for Partners that can be leveraged on behalf of our CSP customers with benefits like cloud consults in addition to Microsoft engineering and support.
Benefits of CSP
- Pricing and licensing flexibility
- No minimum user, device count or spend required
- Billed monthly on a pay-as-you-go model with the ability to access 1 or 3 year reserved instances for Azure
- CSP Support for customers including tenant creation and administration, billing, license procurement and provisioning etc.
- Can integrate easily with Professional Services or Managed Services engagements
Frequently Asked Questions
Can volume licenses be transferred between devices or users?
Yes, in many cases, volume licenses can be transferred between devices or users within the same organization. However, there are specific requirements and procedures that must be followed. It’s important to consult the Product Use Rights (PUR) document for the specific license you have for detailed information.
What happens to my licenses if my organization undergoes a merger or acquisition?
During a merger or acquisition, licenses can typically be reassigned to the new entity, but this process involves a series of steps that must be strictly followed to ensure compliance. It’s recommended to contact Microsoft directly or work with a licensing specialist to navigate this transition.
Are there volume licensing options for non-profit organizations?
Microsoft does offer special volume licensing programs for non-profit organizations with discounted rates. Eligible organizations must meet Microsoft’s non-profit criteria and should reach out to a Microsoft partner or representative for more information.
How do I access my software downloads and keys through volume licensing?
Once you have signed a volume licensing agreement, you will gain access to the Microsoft Volume Licensing Service Center (VLSC), where you can download your software and access license keys.
Is it possible to combine different Microsoft Volume Licensing programs?
In some situations, organizations can mix and match different volume licensing programs to best meet their needs. It’s wise to consult with a licensing specialist to find the most cost-effective and compliant solution for your situation.
Can volume licensing be used for both on-premises software and cloud services?
Yes, Microsoft Volume Licensing agreements can cover both on-premises software installations and cloud services like Microsoft 365 and Azure.
Let us negotiate your Microsoft Licensing
The bottom line of Microsoft Volume Licensing depends on several factors, from the enterprise’s size to the purpose of the purchase. On top of that, the licensing cost also comes down to your negotiation skills. You have to make a strong case for your organization to get the best licensing deal. Nothing is really set in stone when it comes to enterprise license prices. And shaving off only a few dollars for each user/device can amount to huge savings.
However, negotiating with Microsoft is more complicated than you think. First of all, you don’t just focus on the price but also on the terms of the agreement. You also have to consider your long-term IT and business goals before purchasing a license. And remember, you may have to go through this whole process every time you renew a license.
Partner with Softlanding to get the most out of Microsoft Volume Licensing. As a Tier 1 (direct) CSP provider we specialize in digital transformations that take into account licensing, and the need for scalability and flexibility. Softlanding also specializes in helping organizations access and deploy Microsoft enterprise technology platforms such as Azure, Office 365, and Microsoft Teams.
Reach out to us and start leveraging world-class software products and services efficiently and cost-effectively.
Written By:
softlanding
Softlanding is a long-established IT services provider of transformation, professional services and managed IT services that helps organizations boost innovation and drive business value. We are a multi-award-winning Microsoft Gold Partner with 13 Gold Competencies and we use our experience and expertise to be a trusted advisor to our clients. Headquartered in Vancouver, BC, we have staff and offices in Toronto, Montreal and Calgary to serve clients across Canada.
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