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Microsoft’s New Commerce Experience(NCE) is the new invoicing and subscription licensing system for the Microsoft CSP program. To keep up with the changing business requirements and subsequent demands of the customers Microsoft has introduced the “per seat” model. The NCE is being offered for Microsoft 365, Dynamics 365, Windows 365, and Power Platform licenses from January 2022. It was slated to be released in October 2021, but the date has been pushed back to give Microsoft CSP partners more time for a smooth transition.
New Commerce Experience from a CSP Lens
As a CSP, the NCE will make managing the customer subscription easier by reducing the complexities associated with licensing. The NCE will make transacting with Microsoft agile and more streamlined. Over the next few months, you will have to move the existing subscriptions to the NCE and place orders for new subscriptions through NCE only. From March 2022, purchase of a new subscription or renewal of an existing one will be through NCE. Microsoft has planned to decommission the existing purchase platform by February 2023. Post these all existing and new subscriptions will be moved to the NCE.
To attract the customers to move to the NCE, Microsoft is offering two-time bound promotions starting January 2022. These promotions will be valid for both monthly and annual term subscriptions. A 5% discount would be offered on annual term plans till March 2022 and the monthly term plan which will be usually 20% higher than the annual term plan will be offered at the regular annual term pricing till June 2022.
New Commerce Experience: Benefits for CSPs
Let’s quickly take a ride down the benefits that NCE will be offering to the CSPs and how this transition can help create better business outcomes:
Long-term contracts
Transaction through the NCE, will give customers the option of choosing between three opinions: monthly subscription, annual subscription, and multi-year subscription. Similar to the existing model, under monthly subscription the customers will be billed for their subscription’s month-on-month based on the number of licenses. The monthly subscription would be charged a premium of 20% over the annual and multiyear plans.
In the annual as well as multi-year subscriptions the payment would be one time at the beginning of the subscription. When customers opt for multi-year subscriptions the price will lock in for three years protecting their subscriptions from future price increases. This will attract customers to take subscriptions for longer periods ensuring higher customer retention, lower churn, and better revenue forecast.
Under NCE, the customers would prefer annual as well as multi-year plans and provide CSPs with upfront payment at the start of the subscription term.
No minimum threshold revenue to earn incentives
For FY22, the minimum CSP revenue threshold is $25,000 in the preceding 12 months to earn core incentives in the existing system. However, if partners transact under NCE, there will be no minimum revenue required to earn the incentives in FY22. Partners who are unable to meet this minimum revenue threshold should move to the NCE early on to avoid losing out on incentives.
Simplified subscription management
NCE will simplify subscription management by offering new features and tools. As a CSP you can offer your customers a blend of short-term and long-term subscriptions to take care of their seasonal fluctuations in license demand.
Increased operational efficiency
Long term contracts coupled with one-time payment reduces the time and resources spent on invoicing, billing, payment follow-ups, reconciliation, etc.
Reduction in cancellation window
The cancellation window has been reduced to 72 hours for monthly, annual as well as the three-year subscription models. After the 72 hours window the customers can only cancel their subscriptions at the end of the term. Once a customer has bought a specific number of seats, they will not be allowed to decrease the number till the end of the subscription term. The number of seats can be increased with pro rata billing. This reduces the percentage of revenue unpredictability that is associated with frequent reductions in the number of licenses.
Alignment with other Microsoft programs
The CSP program will be aligned with other Microsoft programs to provide a consistent purchase experience to the customers. The terms and conditions of the contract will remain the same for all cloud purchases irrespective of the mode of sales. The offers and benefits available in other Microsoft programs like multi-geo add-ons for Microsoft 365 and multi-year price protection which is currently available in Enterprise Agreements will be available in CSP also.
Get Started on NCE with C3
While you get a more streamlined customer experience with NCE, you can take your CSP business a step further with C3. C3 can help you revolutionize your CSP business to reduce administrative overheads, empower your customers, prevent revenue leakage and much more. Explore our best-in-class features with subscription recurring revenue management, automated invoicing, customer self-service, top integrations, and ability to bundle offers and coupons. Take charge of your business growth today with C3!
