New 3-Year Microsoft 365 Subscriptions Launching June 1st

Microsoft is introducing new 3-year subscription terms for Microsoft 365 E3, E5, and related suites in the Cloud Solution Provider (CSP) program, starting June 2025. These changes bring price protection and new promotional discounts but also require careful planning due to upfront billing and seat restrictions.

For IT leaders in SMBs and enterprises, understanding these updates is critical to optimizing licensing costs and ensuring alignment with organizational needs. This blog breaks down the new subscriptions, their timelines, benefits, and considerations, helping you prepare for this shift in Microsoft 365 licensing. 

What Are the New 3-Year Subscriptions? 

Starting June 1, 2025, Microsoft will offer 3-year subscription terms for Microsoft 365 E3 and E5 (with or without Teams) and Teams Enterprise in CSP. These subscriptions require a minimum of 100 licenses per SKU and are available with upfront or annual billing options—no monthly billing will be available. This means organizations currently paying monthly will need to plan for higher upfront financial commitments. The pricing matches three times the current 12-month subscriptions, but the key benefit is price protection against increases over the 3-year term. Additional seats can be added at any time, however Microsoft will not allow seat reductions during the term, so IT leaders must ensure their license count aligns with long-term needs. 

On July 1, 2025, Microsoft will extend 3-year terms to Microsoft 365 E5 Security and E5 Compliance mini suites, offering similar billing and commitment terms. These subscriptions are available to both new and existing customers, with options to prorate mid-term upgrades to align with other annual subscriptions. 

Timeline for Availability 

Microsoft is rolling out these subscriptions in two phases: 

• June 1, 2025: General availability of 3-year SKUs for: 

• • Microsoft 365 E3 (with and without Teams) 

• • Microsoft 365 E5 (with and without Teams) 

• • Teams Enterprise standalone 

• July 1, 2025: General availability of 3-year SKUs for: 

• • Microsoft 365 E5 Security mini suite 

• • Microsoft 365 E5 Compliance mini suite 

Promotional Discounts for New Customers 

To encourage adoption, Microsoft is launching promotional discounts for new-to-offer customers transitioning from on-premises solutions or upgrading from lower Office 365 plans: 

• Microsoft 365 E3 and E5 Promotions: 

• • Offers: Microsoft 365 E3 and E5 (with and without Teams) 

• • Discount: 10% off the 3-year term 

• • Billing: Upfront or annual options 

• • Eligibility: New-to-offer customers only 

• • License Range: Minimum 100, maximum 2,400 licenses 

• • Duration: June 9, 2025 – December 31, 2025 

• Microsoft 365 E5 Security and Compliance Mini Suite Promotions: 

• • Offers: Microsoft 365 E5 Security and Compliance 

• • Discount: 10% off the 3-year term 

• • Billing: Upfront or annual options 

• • Eligibility: New-to-offer customers only 

• • License Range: Minimum 100, no max 

• • Duration: July 1, 2025 – December 31, 2025 

Benefits and Considerations for IT Leaders 

The 3-year subscriptions offer several advantages for SMBs and enterprises: 

• Price Protection: Locking in rates for three years shields your organization from annual price increases, providing budget predictability. 

• Simplified Renewals: A single 3-year term reduces the administrative overhead of annual renewals, freeing up IT teams for strategic priorities. 

• Promotional Savings: New-to-offer customers can leverage the 10% discount to help offset the upfront cost, making it an attractive time to upgrade. 

However, there are key considerations: 

• Upfront Costs: For a 500-employee SMB moving from monthly to annual billing, the shift to a 3-year upfront payment could strain budgets, requiring careful financial planning. 

• No Seat Reductions: Mid-term reductions are not an option with 3-year term subscriptions, so enterprises committing to large volumes must forecast accurately to avoid over-licensing. 

• Proration Flexibility: Existing customers can prorate upgrades to align with other subscriptions. For example, a customer with an annual Microsoft 365 E3 subscription expiring December 31, 2025, can upgrade to a 3-year term on July 1, 2025, prorating the new subscription to end December 31, 2027, simplifying renewal cycles. 

How CloudServus Can Help 

Microsoft licensing changes like these underscore the value of working with a top-tier CSP partner. At CloudServus, we provide expert guidance to help you navigate the new 3-year subscriptions, ensuring your licensing strategy aligns with your budget and goals. Whether you’re consolidating tenants or optimizing costs, our team can assess your needs and recommend the best path forward. For organizations managing multiple tenants, our Microsoft 365 Tenant Merger Assessment can streamline your environment for the new subscription terms. 

Optimize Your Microsoft 365 Licensing Strategy 

The new 3-year subscriptions for Microsoft 365 E3, E5, and related suites offer price stability and promotional savings, but they require careful planning to manage upfront costs and seat commitments. By understanding the timelines, benefits, and considerations, IT leaders can make informed decisions to maximize value. Ready to explore how these subscriptions fit into your strategy? Schedule a Microsoft Licensing Assessment with CloudServus to ensure your organization is prepared for this change.