What exactly is an LSP?

A Licensing Solution Provider is a specific type of Microsoft partner authorized to manage Enterprise Agreements (EA) on behalf of customers. If you want an EA, working with an LSP is mandatory.

LSPs are responsible for:

• Drafting and managing EA contracts
  • Direct model: Microsoft bills the end customer directly and retains full control over pricing and contract amendments. The LSP does not influence these elements.
  • Indirect model: The LSP sits between Microsoft and the end customer, providing pricing—which typically includes a margin on top of Microsoft’s base price. However, any contract amendments are still managed by Microsoft.
• Processing orders and adjustments (adds, removals, renewals)
• Supporting with true-ups and annual reporting
• Facilitating software assurance benefits and contract compliance

Most LSPs are also Tier 1 Cloud Solution Providers (CSPs), meaning they can additionally sell Microsoft cloud subscriptions like Microsoft 365 or Azure under the CSP model.

LSP, Reseller vs CSP: What’s the difference?

So why are LSPs failing to deliver?

LSPs have become victims of their own scale. With many growing rapidly through acquisitions, the result has been less personalized service, limited expertise, and a laser focus on margins rather than customer success and happiness.

Margins over value

In indirect agreements—typically involving public sector customers or regions where Microsoft doesn’t engage directly—LSPs can set the final customer price, allowing them to earn margins. This makes it an attractive model for resellers, especially in markets where Microsoft rebates are minimal or non-existent. However, these margin-based incentives have driven many LSPs to aggressively push customers to CSP in direct markets. Even when it is not the best option for the customer. Some partners charge over 15% margin on top of the CSP list price (Microsoft’s retail rate to partners), significantly boosting their profits. At the same time, as Microsoft continues to reduce rebate programs, many LSPs have started charging for services that were once included for free — such as basic Enterprise Agreement (EA) management.

The result? Dissatisfied customers who don’t understand what value they’re getting, or why they need an LSP at all.

Microsoft is changing too

This shift away from the traditional LSP model isn’t just something we’re observing — it’s something Microsoft is actively steering. One of the clearest signs? The growing adoption of the Microsoft Customer Agreement (MCA) for commercial customers.

Unlike the Enterprise Agreement (EA), the MCA does not require an LSP. For many organizations, this is a sign that the future of licensing is more direct, more transparent, and more controlled by the customer — not the partner.

This strategic change highlights a critical truth: the LSP model is no longer the default, and clinging to it may actually hold your organization back.

What LicenseQ offers (and why it’s different)

LicenseQ offers the same operational support as an LSP — but better, with a clear focus on transparency, expertise, and customer interests. We’re not an LSP, and we don’t want to be. But we:

• Take over the administrative workload of contract and subscription management
• Provide licensing expertise that many LSPs no longer offer
• Maintain relationships with all your CSP and LSP partners, so you don’t have to
• Help Microsoft customers stay in control and make informed licensing decisions

We call it unburdening — making licensing less painful and more strategic.

Fulfillment ≠ Value

Just because an LSP fulfills a contract doesn’t mean they’re providing value. Microsoft has made it easier than ever for customers to manage their own environments — and more customers are asking, “Why am I paying for something I don’t need?”

At LicenseQ, we believe there’s a better way. One that puts customers first, removes complexity, and delivers real expertise without hidden agendas.