Copilot, Licensing, Microsoft,

How is Microsoft add Copilot to an existing EA?

Short Answer

Microsoft is being “generous” by wrapping Copilot into Enterprise Agreement (EA) renewals. Customers with little to no interest are being incentivized to “test” the features of Copilot at little to no cost. Customers with high interest are incentivized to add several subscriptions to secure better contract discounting and obtain services for deploying and integrating AI-related services. This may seem like a win-win deal, but the devil is in the details.

In-Depth Answer

This is the first opportunity for Microsoft sellers to plug Copilot into the typical end-of-fiscal-year sales cycle. Assuming 70-80% of Microsoft’s customers have contract anniversary dates in calendar Q2/Microsoft’s fiscal Q4, we can estimate that roughly 20-25% of customers will have EA renewals in 2024. This positions those customers as ideal test subjects in Microsoft’s go-to-market approach.

Microsoft places its current customers into two categories:

  • Customers with little to no interest: At little or no cost, customers with little to no interest in Copilot are being asked to add a few subscriptions. This is to let their employees “test” features and potential benefits. In turn, adding Copilot to the EA triggers an entry in the “future pricing” table of an EA. For instance, if Copilot is acquired at the list price of $30 per user per month, then future purchases in the EA will also be at list price. If a sizable organization wants to expand Copilot significantly later on, having Copilot in the future pricing table may preclude a negotiated acquisition, even with a large up-front commitment. Instead, customers may want to leverage non-EA programs for a 1-year Copilot purchase while also asking Microsoft to discount their EA to create a “no cost” evaluation.
  • Customers with high interest and quantities: Customers with significant interest and scope for Copilot may be incented to add a number of subscriptions to secure better contract discounting and obtain services for deployment and integration of AI-related services. If the discounting supports adding Copilot while also securing reasonable price points for core licensing, this is a viable option. However, some additional asks may make a commitment unnerving, including press participation, minimum quantities throughout the contract or having to use a Microsoft partner for services funds.

The key is to know your rebuttals before engaging, including your walk-away thresholds.

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