The free grace period is gone.
As of today (May 4, 2026) Microsoft has eliminated the 30-day free service window for expired CSP subscriptions. Subscriptions that used to coast silently into a no-cost holding state are now entering a paid Extended Service Term the moment they expire.
Not next week. Not at the next renewal cycle. Now.
If you manage a CSP portfolio and haven't reviewed your subscriptions, some of them entered EST today. You're being billed for a term you didn't choose.
This guide covers everything you need to understand about EST: what it is, who it affects, what it actually costs, and the technical trap that's generating unintended charges for partners who thought they were already protected.
What are Extended Service Terms?
Extended Service Terms (EST) are a new end-of-term category introduced by Microsoft for Cloud Solution Provider subscriptions. They replace the free grace period that existed when a subscription's auto-renewal was disabled.
Microsoft announced the change in October 2025. Enforcement started May 4, 2026.
The definition is precise: when an eligible subscription expires and no explicit end-of-term action has been selected, the subscription automatically moves into an Extended Service Term. Service continues. Billing starts. The partner pays the standard monthly rate for that SKU, plus a 3% uplift.
EST applies to all CSP types: Direct Bill partners, Indirect Resellers, and Distributors. It also applies to MCA-E agreements and Buy-Online purchases.
The core logic is straightforward: Microsoft has ended the model where expiration triggered a free holding state. Continued service now requires either a renewal or a paid EST. There is no third option that preserves service for free.
How the previous model worked and why it no longer does
Before EST, a CSP partner had two options at the end of a subscription term:
Option 1: Renew
Standard behavior. autoRenewEnabled: true meant the subscription rolled over automatically at the end of term.
Option 2: Disable auto-renewal.
Setting autoRenewEnabled: false triggered a 30-day grace period. The customer kept access. No additional billing. The partner had time to discuss next steps.
This model had an obvious operational convenience. It also had a cost the partner didn't bear: Microsoft was providing 30 days of service with no corresponding revenue. EST closes that gap.
The free grace period isn't delayed or reduced. It's eliminated.
The three end-of-term paths under EST
Microsoft replaced the old two-option model with three explicit choices. Every eligible subscription must now resolve into one of them.
Path 1: Renew to a new term
- Works exactly as it always has. Supports scheduled changes or a straight renewal on the same terms. No operational change required for partners who are already managing active renewals.
Path 2: Cancel at expiration
- Service ends on the subscription's last day. The customer loses access immediately. Data is retained for 90 days, enough time to export or back up. The subscription cannot be recovered or reactivated.
- This option must be set explicitly before the subscription's end date. It is not automatic.
Path 3: Extended Service Term
- Service continues. Billing shifts to a monthly cadence at the standard monthly rate + 3% uplift.
- For SKUs where no monthly plan exists, the uplift is 23%.
EST renews month-to-month until the partner either cancels or converts to another SKU. Cancellation is prorated to the day, you pay only for the days the EST was active.
The key characteristic of EST is flexibility: unlike other monthly subscriptions, an EST can be canceled at any time, without the standard 7-day cancellation window restriction.
Which subscriptions are eligible for EST?
Not every subscription in your portfolio is subject to these rules. A subscription enters EST eligibility only if all three conditions are true simultaneously:
- Purchased or renewed on or after April 1, 2025
- Expiry date falls on or after May 4, 2026
- Auto-renewal is set to off (
autoRenewEnabled: false)
Subscriptions that don't meet all three criteria retain their previous behavior. Trials and end-of-sale SKUs are excluded from EST.
If a subscription was purchased before April 1, 2025, or expires before today's enforcement date, it keeps the old grace period model for that term.
What EST actually costs: by the numbers
The 3% uplift sounds small. At portfolio scale, it isn't.
A Microsoft 365 Business Basic subscription at $6.00 per user per month becomes $6.18 in EST. For a customer with 100 licenses, that's $18 per month in unplanned cost, for every month the partner waits to act.
For an Indirect Reseller managing 50 customers, each with an average of 80 seats across multiple SKUs, a failure to review expiring subscriptions translates to hundreds of dollars in monthly billing the customer didn't budget for and the partner can't easily justify.
The cost isn't catastrophic per line. But it compounds. And it starts the day the subscription expires, not when you notice it on the invoice.
EST charges appear in reconciliation files with the SKU name including "extended service term." Partners can also match them against the EST-specific price list, available in the Partner Center pricing workspace under the licensebasedest price sheet view.
The API trap
Setting autoRenewEnabled: false is no longer enough. This is the part most partners haven't caught yet.
Before EST, calling the Partner Center API with autoRenewEnabled: false canceled the renewal. That was the entire mechanism. It was clean and predictable.
That behavior no longer applies to eligible subscriptions.
From February 16, 2026 onward, any API request that sets autoRenewEnabled: false on an eligible subscription — without an explicit cancellation instruction — is automatically converted to EST within a few hours through a background process.
The API still returns autoRenewEnabled: false in the response. That's intentional: Microsoft preserved this for backward compatibility. But the subscription's actual end-of-term behavior is EST, not cancellation.
The response looks correct. The outcome is not what you intended.
If your billing platform, RMM tool, or homegrown automation sets autoRenewEnabled: false to signal "do not renew," and hasn't been updated with the new API syntax, it is generating unintended ESTs right now. The subscriptions are visible. The billing is real. And nothing in the API response tells you it happened.
To cancel an eligible subscription explicitly under the EST model, the API call must include a scheduledActions block with actionType: Cancel:
Without this payload, the intent to cancel is not registered. The subscription enters EST at expiration.
To set a subscription to move to EST at end of term intentionally, the call uses actionType: RenewToExtendedServiceTerm:
Partners who have not reviewed their API integrations since February 16, 2026 should treat this as a priority audit item.
EST and partner-to-partner transfers
Subscriptions that have moved into EST are not eligible for the standard partner-to-partner (P2P) transfer process.
If a customer needs to move from one CSP partner to another and their subscription is in EST, there are two resolution paths:
Option 1
- Manual purchase and cancel. The receiving partner purchases a new subscription for the same SKU. The source partner cancels the EST. This requires close coordination on timing to avoid service gaps or double-billing.
Option 2
- Convert to base SKU, then transfer (recommended). The source partner converts the EST back to the base SKU subscription, creating a new regular subscription. That subscription can then follow the standard P2P transfer process.
SKUs with a 300-seat limit add a specific constraint:
- a new subscription can't be purchased above the limit under a new partner.
- For these, Microsoft recommends completing P2P transfers before end of term.
- Partners with subscriptions already in EST should convert back to the base SKU before initiating a transfer.
How to audit your portfolio for EST exposure
Microsoft provides two mechanisms to identify subscriptions currently configured for EST.
Partner Center data export. From the customer workspace, partners can use the AI Assist feature to generate a download file of all subscriptions set to go to EST at end of term. The prompt:
"Please generate a list of all my subscriptions that are set to go to EST at the end of their term."
The file generates in the background and may take up to 6 hours to complete. It can only be requested once per day. The export includes:
- subscription ID,
- customer tenant ID,
- SKU,
- quantity,
- term duration,
- billing cycle, and
- term end date.
EST conversion webhook
Partners can subscribe to the subscription-migrated-to-extended-service-term event. This fires whenever a subscription is converted from autoRenewEnabled: false to EST — in real time. Integrating this webhook is the only way to detect EST conversions as they happen rather than discovering them after the fact in reconciliation files.
API query limitations
One important limitation: the getSubscriptions API endpoint does not return EST status per subscription. The only way to confirm whether a specific subscription is in EST is to query it individually. There is no bulk EST eligibility or status call.
Partners managing large portfolios who rely on the standard getSubscriptions call for operational visibility are working with incomplete data.
How CloudCockpit resolves EST at scale
Auditing EST exposure manually works for a handful of subscriptions. It doesn't work for a portfolio of thousands.
The Partner Center export is limited to once per day, takes up to 6 hours, and requires manual review. The webhook requires integration infrastructure. The individual subscription API queries don't scale. And the underlying problem, subscriptions entering EST because no one made an active decision, continues in the background while the audit is in progress.
CloudCockpit centralises EST visibility across your entire customer portfolio in a single dashboard. Subscriptions approaching end of term are surfaced automatically, with the current end-of-term setting and the days remaining before expiration. Partners and resellers can set the action, renew, cancel, or move to EST, directly in the platform without navigating individual customer records in Partner Center.
What you can do in CloudCockpit
- Automated EST detection: All subscriptions eligible for EST are identified automatically, with expiration countdown
- Batch end-of-term changes: Set renewal decisions for multiple subscriptions at once across all customers
- Renewal alerts: Get notified before subscriptions expire so you can discuss options with customers
- API integration: CloudCockpit syncs with Partner Center in real-time, so your decisions are reflected immediately
- Reconciliation tracking: See EST charges as they appear in Partner Center and match them to subscriptions
Learn how to change subscription renewal settings in CloudCockpit →
See the full EST management guide for CloudCockpit →
For Direct Bill partners with large portfolios and for Indirect Resellers managing multiple tenants, the operational difference between reacting to EST charges and proactively managing renewal decisions is the difference between explaining unexpected invoices and running a predictable billing cycle.
See how CloudCockpit manages EST for CSP partners →
What to do right now
Three actions for every CSP partner today.
Audit your portfolio. Use the Partner Center AI Assist export or CloudCockpit to identify every eligible subscription currently configured for EST. Do this before reviewing anything else — you need to know the scope of exposure first.
Review your API integrations. Any system that sets autoRenewEnabled: false without a scheduledActions cancel instruction is generating unintended ESTs. This includes billing platforms, RMM tools, and any custom automation built before February 2026. Update the integration or treat every output as requiring manual verification.
Set an explicit end-of-term action for every eligible subscription. Renew, cancel, or consciously move to EST — but make the decision before the expiration date. EST as a default is not a problem. EST as a surprise is.
The partners who manage this well are the ones who turned it into a customer conversation before enforcement started. That window is still open for subscriptions with future expiry dates.
