Understanding Contract types in the Platform

Appxite Updated by Appxite

Introduction

This article explains the different contract types, contract purposes, and contract names used in the Platform. Understanding these concepts helps you navigate the relationships between Vendors, Distributors, Sellers, and Customers, and clarifies how billing and product access are managed through contracts.

In this article:

Understanding contract purposes

Every contract in the Platform has a Contract Purpose that defines its role in the business relationship. There are three main contract purposes:

Invoice

Invoice contracts are created between a Seller and an end-Customer. These contracts define:

  • The Billing Cycle Day (when invoices are generated each month)
  • The Currency used for invoicing the Customer
  • The terms under which the Seller invoices their Customer

All Customers of a Seller are invoiced on the same day each month using the same currency.

Resell

Resell contracts (also called Seller Contracts) are created between organizations that sell or resell products. These contracts exist in the supply chain between:

  • Vendor → Distributor (in Indirect Model)
  • Vendor → Seller (in Direct Model)
  • Distributor → Seller (in Indirect Model)

Resell contracts define:

  • Which products the downstream partner can sell
  • The currency used for transactions between the two parties
  • The billing cycle for invoices between provider and consumer

Consume

Consume contracts (also called Support Contracts in some contexts) define consumption-based relationships. These contracts:

  • Link to a specific Seller Contract (Resell contract)
  • Calculate fees based on a percentage of sales under that Seller Contract
  • Have their own currency and billing cycle, which may differ from the related Seller Contract
  • Are used when a support organization receives a percentage of the Customer price for subscriptions

Consume contracts are also created between Vendor → Customer when a tenant is provisioned, linking the vendor's services to the end customer's consumption.

Common contract names and their meanings

Contract names identify the type of agreement or service relationship. Here are the most common contract names you'll encounter:

Distribution Services

Distribution Services is the standard contract type used between:

  • Distributor and Seller (in Indirect Model)
  • Vendor and Seller (in Direct Model)
  • Seller and Customer (Invoice contracts)

This contract type governs the general distribution and reselling of products.

Service Agreement

Service Agreement contracts typically refer to support or service-level agreements between organizations. These may include maintenance contracts or support arrangements.

Value Add Services

Value Add Services contracts cover additional services provided by Distributors or Sellers beyond standard product reselling. These services add value to the core vendor offerings and may include:

  • Professional services (consulting, implementation, migration)
  • Managed services (ongoing management and monitoring)
  • Technical support beyond vendor-provided support
  • Training and enablement services
  • Custom integration services

This contract type is used for service-based revenue streams and may have different pricing models (hourly, fixed-fee, retainer) and billing cycles from product contracts.

CSP (Cloud Solution Provider)

CSP contracts relate specifically to Microsoft Cloud Solution Provider program agreements. These contracts govern the reselling of Microsoft cloud services.

Azure Plan & OneTime

Azure Plan & OneTime contracts are specific to Microsoft Azure services and cover two types of purchases:

  • Azure Plan: Modern Azure consumption-based services where customers pay for actual resource usage (compute, storage, networking, etc.)
  • OneTime purchases: Non-recurring purchases such as:
    • Reserved Instances (1-year or 3-year commitments)
    • Perpetual software licenses
    • One-time software purchases

This contract type is typically used in Microsoft CSP (Cloud Solution Provider) scenarios and allows Sellers to offer both consumption-based Azure services and one-time Microsoft products to their Customers.

ByocContractType

ByocContractType refers to "Bring Your Own Contract" scenarios where partners use their existing vendor agreements within the platform.

Contract types explained

The platform uses three primary contract types to manage different business relationships:

Invoice Contract

  • Provider: Seller
  • Consumer: Customer
  • Purpose: Invoice
  • Function: Defines how the Seller invoices their end-Customers
  • Key characteristics:
    • Same billing cycle day for all Customers of a Seller
    • Single currency per Seller for all their Customers
    • Created automatically when a Customer is onboarded

Seller Contract

  • Provider: Vendor or Distributor
  • Consumer: Seller
  • Purpose: Resell
  • Function: Grants the Seller access to sell specific products
  • Key characteristics:
    • Defines which products the Seller can offer
    • Establishes pricing and currency for the relationship
    • Can have contract conditions (allowed countries, industries)
    • Created during seller onboarding

Support Contract

  • Provider: Seller or Distributor
  • Consumer: Support organization (e.g., Platform provider)
  • Purpose: Consume
  • Function: Calculates percentage-based fees from specific Seller Contract sales
  • Key characteristics:
    • Always linked to one specific Seller Contract
    • Uses percentage of Customer price for fee calculation
    • Has independent currency and billing cycle
    • Only includes subscriptions under the linked Seller Contract

Relationship between Provider, Consumer, and Vendor

Understanding the roles in contract relationships is essential:

Provider

The Provider is the organization that:

  • Grants access to products or services
  • Issues invoices to the Consumer
  • Defines the terms of the contract

Examples:

  • In a Vendor-Distributor relationship, the Vendor is the Provider
  • In a Seller-Customer relationship, the Seller is the Provider

Consumer

The Consumer is the organization that:

  • Receives access to products or services
  • Pays invoices from the Provider
  • Operates under the contract terms set by the Provider

Examples:

  • In a Vendor-Distributor relationship, the Distributor is the Consumer
  • In a Seller-Customer relationship, the Customer is the Consumer

Vendor

The Vendor is the original source of products in the supply chain. Vendors are typically software publishers or service providers such as:

  • Microsoft
  • IBM
  • Cisco
  • Other ISVs (Independent Software Vendors)

In the platform, the Vendor field identifies which vendor's products are covered by a particular contract.

Contract examples by business model

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Direct Model

In the Direct Model, the supply chain is: Vendor → Seller → Customer

Contracts created:

  1. Seller Contract (Resell)
    • Provider: Vendor
    • Consumer: Seller
    • Purpose: Resell
    • Example: Microsoft establishes a contract with ABC Seller in USD, billing cycle day 15
  2. Invoice Contract (Invoice)
    • Provider: Seller
    • Consumer: Customer
    • Purpose: Invoice
    • Example: ABC Seller creates contracts with multiple Customers, all billed on day 1 in NOK

Indirect Model

In the Indirect Model, the supply chain is: Vendor → Distributor → Seller → Customer

Contracts created:

  1. Seller Contract (Resell) - Vendor to Distributor
    • Provider: Vendor
    • Consumer: Distributor
    • Purpose: Resell
    • Example: Microsoft establishes a contract with XYZ Distributor in USD, billing cycle day 15
  2. Seller Contract (Resell) - Distributor to Seller
    • Provider: Distributor
    • Consumer: Seller
    • Purpose: Resell
    • Example: XYZ Distributor creates a contract with ABC Seller in NOK, billing cycle day 20
  3. Invoice Contract (Invoice) - Seller to Customer
    • Provider: Seller
    • Consumer: Customer
    • Purpose: Invoice
    • Example: ABC Seller creates contracts with multiple Customers, all billed on day 1 in NOK

Support Contract Example

A Support Contract scenario where a platform provider receives fees:

Setup:

  • ABC Seller has two Seller Contracts:
    • Seller Contract A: With Microsoft (Vendor A)
    • Seller Contract B: With IBM (Vendor B)

Support Contract:

  • Provider: ABC Seller
  • Consumer: Platform (support organization)
  • Purpose: Consume
  • Linked to: Seller Contract A (Microsoft only)
  • Fee: 5% of Customer price
  • Currency: USD
  • Billing cycle day: 10

Result: Platform receives 5% of Customer price for every Microsoft subscription sold under Seller Contract A. IBM subscriptions under Seller Contract B are not included in this Support Contract.

Limitations

  • Billing Cycle Day: The billing cycle day is a number from 1 to 28, specifying which day of the month invoices are generated
  • Contract Currency: Once set during contract creation, currency changes require assistance from Support team
  • Contract Status: Contract status (Active/Deactivated) can only be changed by contacting Support team
  • Organization Blocking: Blocking an organization does not automatically deactivate its contracts

Summary

The Platform uses three contract purposes (Invoice, Resell, Consume) to manage relationships between organizations. Contract names like Distribution Services, CSP, and Azure Plan & OneTime identify specific agreement types. Understanding the Provider, Consumer, and Vendor roles clarifies how products flow through the supply chain and how billing relationships are structured. The platform supports both Direct Model (Vendor-Seller-Customer) and Indirect Model (Vendor-Distributor-Seller-Customer) business structures through its flexible contract system.

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