Microsoft’s Cloud Solution Provider (CSP) program continues to evolve as it adapts to support the constantly shifting needs of today’s businesses. As part of its investment in the CSP program, Microsoft has been working to reduce licensing complexity and costs and providing flexibility to support a range of client purchasing scenarios. To achieve this, Microsoft launched the new commerce experience (NCE) for Microsoft Azure in 2019 — and, in the fall of 2021, expanded NCE to include Microsoft 365, Dynamics 365, Windows 365, and Power Platform for commercial seat-based offers.
As your Microsoft experts, the Pax8 Microsoft team is here to help you stay current on the latest changes and updates to the CSP program so that you can take advantage of all the available features, benefits, and opportunities.
Read below to learn more about what NCE means to you.
What is NCE?
The new commerce experience (NCE) “per seat” model for Microsoft 365, Dynamics 365, Windows 365, and Power Platform subscriptions is the latest in the evolution of their CSP program. It provides resellers with new tools to simplify and manage subscriptions.
New commerce experience subscription tracker
To help simplify the management of NCE, Pax8 has developed an NCE tracker tool to help partners manage their customer renewal dates.
This tool will be visible to primary partner admins, partner admins, technical reps, or billing admins in the Pax8 Platform on the left navigation pane. The NCE tracker provides Legacy subscription renewal information that can support partners in determining when their business should move Legacy subscriptions to NCE. Additionally, the NCE tracker shows NCE subscriptions with renewals approaching in the next 30 days.
Legacy to NCE migration for commercial offers
Beginning January 2024, Microsoft announced they will begin an auto-migration of all commercial Legacy subscriptions to NCE on a subscription’s Legacy renewal date. The auto-migration will transition subscriptions with the following attributes:
- Subscriptions will be transitioned to an annual commitment and inherit the existing Legacy subscription billing term of annual or monthly.
- Subscriptions will be transitioned to the NCE version of the product and keep the same quantity.
- Subscriptions dependent on one another (base/add-ons) will all be migrated at the first subscription renewal date.
- Subscriptions will have a seven-day (167-hour) window to make any changes.
- Subscriptions will be provided a new subscription ID and must be synced to PSA integrations.
Partners are highly encouraged to review their customers’ Legacy subscriptions in the Pax8 Platform and discuss a migration plan with them. Partners can self-migrate to NCE at any time using the upgrade button in each subscription and will be prompted to select commitment and billing terms. For customers who would like to be on a monthly commitment, monthly billing must self-migrate before Microsoft’s auto-migration or adjust the subscription in the seven-day cancellation window.
Incentives lost on Legacy and gained on NCE
Here are the Microsoft Business incentives you will lose if you stay on Legacy compared to what you will gain on NCE.
What does this mean for you?
Moving to the new commerce experience will help you prepare for future growth thanks to improved revenue predictability, reduced licensing complexity, multiple-term options, and features that enable new sales capabilities and operational efficiencies.
Term options (promos not included)
- Commitment term: The duration of the Microsoft subscription commitments (monthly or annual).
- Billing term: The frequency of the billing (monthly, annual upfront, or annual paid monthly).
With these new NCE licenses, you are locked into the commitment term selected during checkout and can only cancel or modify within the seven-day (167-hour) modification window.
Monthly commitment term: Monthly billing with a monthly commitment.
- This term options at a 20% premium.
- The commitment and billing both renew each month.
- Partners can only modify in the seven-day modification window each month.
- Billing term option is monthly payment only.
Annual commitment term: Subscriptions are bound for the entire annual commitment and can only be cancelled within the first seven days from provisioning.
- Subscriptions can only be modified to increase seat quantity or upgrade to a higher product.
- Downgrades in seat quantity and product can only be changed or cancelled within the first seven days of provisioning.
- Billing term options are annual upfront payment or monthly billing payments.
Triannual term options: Upfront, annual, or monthly payments (only available for software).
- Pax8 does not offer these for Modern Work or Dynamics products.
Billing terms: Billing terms cannot be changed mid-commitment. The billing term can only be changed during an upgrade, or else it will need to be cancelled, and a net new order will need to be placed. During the upgrade, the billing term can be upgraded from monthly to annual but not from annual to monthly, as that is considered a downgrade.
Commitment terms: Changing a commitment term is possible during an upgrade. Partners can transition from annual commitments paid monthly to annual ones paid annually, as these are considered upgrades. However, it is impossible to downgrade your commitment terms, so you cannot go from annual to monthly.
NCE renewals: NCE subscriptions will automatically renew in the Pax8 Platform with the same commitment terms, billing terms, product, and seat quantity on the first day of a subscription’s renewal. If you need to make any changes to your subscription before renewal, you can schedule changes or cancellations with a future-dated effective date. After processing the renewal, you can also make changes within the first 167 hours (about seven days).
- Seat decreases, increases, or product upgrades can be scheduled with a future-dated effective date.
- Product downgrades require a cancellation/repurchase.
- Changing commitment terms or billing terms require a cancellation/repurchase.
- Future-dated orders will be provisioned at midnight of the local time zone based on the user placing the order.
- For same-day cancellations, the subscription will be cancelled immediately.
- For future-dated cancellations, the subscription will be cancelled at midnight UTC/5pm MT, regardless of the local time zone of the user placing the order.
Nonprofit and Education licenses: Nonprofit and Education licenses will not be offered on NCE at this time.
Cancellations: New commerce will allow 167 hours (about seven days) for cancellations and seat reductions for any new commercial seat-based subscription orders in CSP.
Please be advised that Microsoft will only consider requests from partners for exceptions to the seven-day cancellation and seat-reduction policy if the request involves a cancellation or seat reduction that could not be completed within the first seven days of the subscription term due to a Microsoft error. Examples of partner/customer scenarios that are not eligible for exceptions to the cancellation and seat-reduction policy include the following:
- Customer non-payment of subscription charges
- Customer insolvency or bankruptcy
- Customer requesting a change of partners mid-term due to insufficient service/support from the original partner, price considerations, or other reasons
- Partner or customer having placed the subscription order by mistake
- Customer company merging with, or being purchased by, another company after the seven days of the term
- Local, country, or regional regulations allow more than seven days for a consumer to cancel or return a product (e.g., the EU Consumer Rights Directive) [Note: CELA can provide guidance on this as needed.]
Add-ons: Add-ons are purchased as individual subscriptions, distinct from the base product subscriptions, but still need a valid parent subscription in the Pax8 Platform. Therefore, the end dates may be different.
- Partners will see errors when attempting to buy an NCE add-on product if the customer does not have a valid parent subscription.
Upgrades: For NCE, upgrading means transitioning from one paid subscription to another, but not downgrading from a higher-paid SKU to a lower-paid SKU.
In your subscription with Pax8, you will be able to see eligible upgrade options. You can process an upgrade at any time and choose either to do a full upgrade, where all seats in a subscription are upgraded, or a partial upgrade, where only a select number of seats you choose are upgraded.
Note: Upgrades, partial or full, do not open a 167-hour (seven-day) cancellation window. All upgrades are permanent actions on the subscription and cannot be undone during the term commitment.
Full upgrades will:
- Transition all seats to the new product
- Hold the original subscription ID, commitment term, billing term, and end date
Partial upgrades will:
- Transition a specific quantity
- Start a new subscription ID for the product upgraded but will keep the original commitment term end date
Please note that if an upgrade to a product already has an active subscription on the customer tenant, the upgrade will start a separate subscription, meaning a customer could have two subscriptions with different end dates for the same product.
When processing full or partial upgrades, the upgraded licenses may need to be manually reassigned in the Microsoft 365 Admin Center.
2:1 upgrades, or upgrades consolidating two products to a premium product that includes all the features and functionality of the original two products, is not a current upgrade path offered by Microsoft. If you need to process a 2:1 upgrade, please contact your Pax8 account manager to get a Microsoft support escalation started. Escalations can take around eight weeks to process by Microsoft, and Microsoft must approve a 2:1 upgrade before ordering the new product.
Promotions: Many promotions have a maximum of 2,400 seats per subscription. In these cases, a transaction including more than 2,400 seats will be submitted at non-promotional prices. The seat limits from promotions are enforced across partners. Promotion eligibility is enforced at the subscription level that the partner is transacting. Microsoft determines promotion eligibility after checkout, and if a subscription is eligible for promotional pricing, pricing will be adjusted in the Pax8 Platform shortly after ordering.
Promotional pricing will not automatically be applied to MSRP as of May 2022. If you wish to apply promotional pricing to MSRP, you may edit the MSRP field to the promotional price. This may require an additional PSA re-sync.
Trials: Trials on NCE will provision 25 valid licenses for 30 days and cannot be cancelled. Trials will automatically convert to paid offers for the full 25 licenses, whether they are all assigned or not, and will not have trial alerts from Microsoft in the partner center. At Pax8, we will notify you of upcoming trial conversions at 14, seven, and one day before the trial converts. There are two conversion options:
Automatic trial conversion:
- All 25 seats convert to paid offer, whether in use or not.
- Paid subscription starts on the next day.
- Term duration: Pax8 will renew on monthly terms.*
- Billing cycle monthly
*Note: Pax8 decided to convert trials to monthly commitments over the Microsoft policy of annual commitments to serve the customers better and prevent unnecessary commitments. Pax8 will convert trials to paid subscriptions for all 25 seats on a monthly commitment, with monthly billing on the last day of the trial.
Manual trial conversion:
- Trials can be converted to paid offers at any time during the trial period.
- At the conversion point, the 167-hour (seven-day) cancellation period starts when seats can be reduced.
- Partners can choose the same SKU or an upgrade.
Please note you can only have one trial per SKU per tenant.
Change of channel: As NCE stands today, change of channels will not be permitted outside of the subscription term renewal. Change of channel is only possible at the term renewal, within the seven-day window.
- Customers who would like to purchase through a different partner.
- Partner who would like to purchase through a different distributor.
- A partner moving from direct to indirect.
For mergers and acquisitions, Microsoft will allow these to be exempt from the change of channel policy in the future, but as it stands today, the licenses must remain with the partner and provider from which they have been purchased.
Telco pay-as-you-go: Some license-based products include services with allocated calling plans. These typically come with per-license allocations for minutes per month. Previously, on the Legacy offer, there was no way to enable service usage beyond the monthly limits, which resulted in customers needing to purchase communication credits. On NCE, if a telco offer is started, the partner can enable overages via consumption pay-as-you-go-over. A partner must have an Azure plan tied to the customer tenant to enable overages. If the customer does not have an Azure plan, the partner must check one out before purchasing the telco offer. Once an Azure plan is enabled, the partner must open a Pax8 support ticket notifying Pax8 to physically enable the overages in the customer’s tenant.
*Please note that toll-free numbers are not eligible for overages to be enabled.
Suspended state: Suspended state allows a partner to temporarily pause services for an end customer. Suspending services still requires the customer/partner to fulfill financial commitments and does not pause payment. If you want to suspend a subscription, please open a Pax8 support ticket, as Pax8 will need to perform this action.
Dates and deadlines
January 10, 2022: Pax8 launched Microsoft’s general availability of NCE for Modern Work and Dynamics 365 for indirect partners to offer to CSP resellers. Microsoft also offered two time-bound promotions to incentivize partners to migrate from CSP Legacy to NCE.
Any annual subscription purchased prior to the price change will have that original price locked in for the commitment term.
March 10, 2022: All net new Modern Work and Dynamics 365 subscriptions must be procured through the NCE Platform. Pax8 no longer offers new subscriptions for CSP Legacy.
January 1, 2023: Incentives were made available for NCE transactions (through Microsoft Commerce Incentive [MCI] for commercial offers). Nonprofit, Education, and Government products remain on Legacy and continue to earn incentives as they do not have an equivalent offer on NCE. Any commercial add-on tied to a Nonprofit, Education, or Government base will also have to remain on Legacy but will forfeit incentives.
January 2024: Microsoft will start their auto-migration of moving all commercial Legacy subscriptions to NCE at their Legacy renewal beginning in January 2024. Stay tuned for more information.
The Pax8 approach
We always want to provide the best purchasing experience for our partners. If you are ready to purchase a new NCE subscription, you can locate NCE SKUs in the Pax8 Platform by searching “new commerce experience.” All NCE SKUs will have “new commerce experience” in the title. For example, the NCE version of Microsoft 365 Business Premium will be titled “Microsoft 365 Business Premium [new commerce experience].”
If you have an existing subscription you would like to upgrade to new commerce experience, you can log into the Pax8 Platform to edit that subscription. Once in the subscription, you will click the “upgrade” button. This will automatically transition the base license to an NCE subscription and suspend the Legacy subscription.
For billing, Pax8 subscriptions will always renew on the first of the month, regardless of the term commitment date. However, this will not align with Microsoft. The Microsoft term renewal will align with the subscription commitment term that was selected during checkout. If you purchase an NCE subscription mid-month, Pax8 will bill the partner for the prorated amount of month one plus all of month two on the next invoice.
Pax8 will require all customer NCE subscriptions to have one qualifying NCE base license for every NCE add-on, regardless of whether the customer has a qualifying base license on the tenant purchased from another provider.
The Pax8 Microsoft team will continue to update you as the NCE program expands. If you have any questions about Microsoft program changes, don’t hesitate to reach out to our team.
Guest blog courtesy of Pax8.