Redmond Negotiator

Why Does Microsoft Keep Its Volume Pricing Secret?

Hey Microsoft, want to really help your customers? Publish your volume licensing price list! (Yes, all of it!)

I worked with two of my consulting clients last week, both of whom received quotes from Microsoft for a new Enterprise agreement. As is common these days, both quotes were customized with things like price concessions, discounts for past purchases, a new company being acquired, etc.

Both of these clients have done their homework -- they have a good handle on their license compliance situation, they understand their IT roadmap, and they know which planned purchases should happen in what timeframe. So far, so good.

So I ask, "What have you done to analyze and compare your options, such as Select vs. Enterprise, and Software Assurance vs. none?" Well, part of the answer was "That's why we hired you..." but the other part was, "We just don't have the information...How do you find out?"

The unfortunate answer is that Microsoft only gives its complete volume licensing price list to their reseller partners: the large account resellers (LARs) and enterprise software advisors (ESAs). So, the most common way for a customer to find out how much a given license might cost -- with or without Software Assurance (SA), or via Select vs. Enterprise -- is by asking their reseller or Microsoft rep.

That's not so bad, right? Isn't that part of a sales rep's job? Well sure, but here's the problem: If I'm a commissioned sales rep, and my compensation plan is tilted in favor of selling Software Assurance and Enterprise Agreements, how much pressure will I feel to "manage" the flow of alternative information to the customer?

Allow me to illustrate: There are over 350 unique SKUs for "Office" in the Select price list. Which ones are appropriate for your situation? That's a good question for a reseller rep. But what if the answer you get back only includes "License + SA" SKUs? What if the answer only includes Office Pro SKUs?

If the rep is the only person with a complete price list, you're stuck playing a game of "20 questions" instead of openly exploring all of your options. Sure, you would still need a guide to help you understand why "Office Pro Win32 English SA Step Up MVL" is not the correct SKU for your situation. But at least you'd be able to ask, "Hey, that's a great price on that SKU, are we eligible for that?"

In practice, I’ve found that most LARs will, if asked, send you the complete Microsoft price list (at least that you’re eligible to purchase). So, for example if you’re a Select level A customer, your reseller should have no problem sending you the entire Level A price list. But keep in mind that it’s a large and confusing price list. So sometimes, your rep does a “favor” for you and trims it down to just the SKUs you really need. So make sure you get the right answers to these questions: Are you getting the full list, or a trimmed-down version? Are all of your choices really being offered to you?

The Enterprise Agreement (EA) price list, however, is controlled by your Microsoft rep. Sure, your LAR/ESA gets a copy, but since EAs are direct deals with Microsoft, your Microsoft rep controls that pricing. In practice, LAR/ESA reps sometimes do all the legwork and quote prices, too.

The EA price list is even more complicated than Select. One reason for this is that the item descriptions can be quite vague -- for example, what exactly do you get when you purchase “Dsktp Pro Listed Languages SA MVL Core CAL 6.x Renewal” and what exactly are the pre-requisites? Again, it’s up to your rep to guide you.

By the way, there are over 13,000 unique SKUs in the Enterprise Agreement price list, so you definitely will need a knowledgeable guide to understand your options. But again, whose best interests is your guide working toward? Yours or Microsoft’s?

If you had more complete knowledge about your options, instead of being spoon-fed the options that Microsoft wishes you to choose from, do you think you might get a better deal?

These days, many EAs are customized. So the fog gets even murkier than it already was. For example, if your company has already had an EA and you’re about to sign another agreement, you should be getting a significant price break to account for the licenses that you already own. Sometimes this is called an “SA only” agreement.

So how do you determine if the price break is fair? Well, a price list sure would be handy, wouldn’t it?

For smaller shops, the Open price lists are also available from your resellers; and if you’re a smart Web searcher you can find and compare prices easily. You will still need someone to help make sure you’re looking at the correct SKUs though -- remember it’s you that are responsible for license compliance, not the reseller.

Finally, there’s another reason you want to get your own copy of the price lists (and come to your own thorough understanding of the factors that go into your total cost). It’s called human error. Here’s the situation: Your Microsoft rep is overworked. Your reseller rep is overworked. Their support staff is overworked. You’re overworked. Everybody is really busy and in a hurry to meet deadlines. So…mistakes happen. Maybe somebody cut and pasted the wrong price for a SKU. Maybe someone just picked the wrong line item entirely.

Mistakes happen. How will you be able to double-check your quotes if you don’t have the source data to work from?

So do yourself a favor: Make sure your reseller gives you the entire price list (not a filtered sub-set). And get your Microsoft rep to show you the entire EA price list -- you should find it’s worth it.

About the Author

Scott Braden has helped more than 600 companies negotiate Microsoft volume license deals. For a free case study, "How a Mid-size Company Saved over $870,000 on a $3 million Microsoft Enterprise Agreement, in Less Than Three Weeks," visit www.MicrosoftCaseStudy.com.

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