New Commerce Experience (NCE) FAQ

This article outlines the main questions that arise while reviewing the New Commerce Experience (NCE) FAQ.

Microsoft introduced its New Commerce Experience (NCE) first back in 2019 when the Azure legacy subscriptions were moved to a new Azure Plan. In the fall of 2021, Microsoft will extend its NCE by adding the seat-based cloud offers of Microsoft 365, Dynamics 365, Power Platform, and Windows 365 to it:

The addition of Microsoft 365, Dynamics 365, Power Platform, and Windows 365 offers in CSP to the new commerce experience is another major milestone in our new commerce journey. Microsoft is investing in product innovations, better tooling, and access to new business opportunities that enable partners to grow their CSP revenue and provide more options to customers. - August 2021 announcements

Note! Follow the link to watch the recording of the webinar.

 

Why is Microsoft doing this?

NCE focuses on streamlining and improving the end-customers experience of buying, managing, and using Microsoft services (especially for SMBs). It won’t affect how clients interact with the offerings but the way they are billed for them.

The upcoming changes will provide Microsoft partners with new tools to manage license-based subscriptions: e.g. such that will reduce the management cost and licensing complexity. Also under the new commerce experience, partners will be able to forecast their revenue more accurately. On the other hand, customers will be awarded discounts and multiple new term options.

 

When would customers transition from legacy to NCE?

The seamless transition to the new experience will happen once your customer’s subscription is up for renewal. The new commitment terms will be configured then as well (annual or three-year commitments or the new monthly licensing option).

 

What should be expected?

• Price reduction on annual or multi-year agreements
• New cancellation policy
• New refund terms
• Exclusive offers for Microsoft 365 and Dynamics 365
• Prices premiums for short-term subscriptions to meet fluctuating requirements
• New monthly and annually commitments, and three-year commitments terms
• And much more.

NCE includes Azure Plan, Perpetual licenses, and Seat-based offers.

There is no decrease on any prices, premium price on the monthly term (20% higher than an annual or multi-year).

All new product features come with a significant change to the CSP incentive program. In October, Microsoft will launch incentives for the CPS NCE for direct bill partners, indirect providers, and indirect resellers. Any Microsoft partner that fails to make the transition to the new experience may lose its incentives on transacting the legacy offerings.

 

What would it mean for your business set-up?

Supporting the new commerce experience will no doubt require some changes in the way your cloud marketplace supports and executes Microsoft transactions (due to the new cancellation, new purchasing frequencies, etc.).

We, at AppXite, are aware of the implication such changes can have for any Microsoft CSP business. And especially because the NCE affects some of the top CSP sellers.

We are dedicated to offering our partners a seamless transition from legacy offerings to the new commerce experience for Microsoft 365, Dynamics 365, Power Platform, and Windows 365. And we are working hard towards ensuring this.

 

What's the first to come?

Make sure you don't miss the discounts and promotions Microsoft is launching with the new experience. Contact your account managers in AppXite for exclusive offers.

 

Is Microsoft changing the focus on CSP with the new commerce experience?

No. Microsoft will continue to invest in the CSP program as one of the key sales motions for small and mid-sized businesses (SMB), as well as in Microsoft’s overall commerce experience, to provide the differentiated offers and capabilities partners need to grow their business.

 

Will the new commerce changes apply to all types of CSP partners?

Yes, all partner types in CSP (Indirect Provider, direct bill, indirect reseller) will be included in the new commerce experience.

 

Will I need to sign or accept any new or different agreements?

The Microsoft Partner Agreement (MPA) that partners accept to activate their CSP tenants will continue to be the standard agreement for partners. Customers will continue to accept the Microsoft Customer Agreement (MCA) that governs their purchases. Neither partners nor customers will be required to sign or accept again the MPA or MCA, respectively, as part of this new commerce transition.

 

Will legacy and new commerce experiences coexist, and if so, for how long?

New orders for legacy commercial subscriptions can be placed until March 10, 2022, and renewals of legacy commercial subscriptions can be made until July 1, 2022. We want partners to have ample opportunity to become accustomed to the new commerce features and functionalities, migrate legacy subscriptions to the new commerce experience, and adjust customer billing and accounting operations based on the standardized new commerce invoicing process and schedule. Any annual or multi-year term subscriptions on the legacy platform will remain in effect with existing legacy pricing and policies until the end of their respective subscription terms.

 

Will the new commerce experience be available in all countries?

On October 14, 2021, Microsoft 365, Dynamics 365, Power Platform, and Windows 365 will be available on Microsoft’s new commerce platform in CSP in 248 countries. Review the list of countries/regions available and a timeline for the remaining geos.

NOTE: Seat-based offers in CSP new commerce in the following countries will be released at a later date:

  • China: TBD
  • Brazil: February 2022
  • Canada: Telco products won’t be available in Canada (for example, Microsoft 365 Business Voice)

 

When will I be required to move existing subscriptions to new commerce?

Microsoft recognizes that CSP partners will need time to operationalize the provisioning, billing, and policy changes in new commerce and to migrate existing (legacy) subscriptions to the new commerce platform, so we’re taking a phased approach to require partners to transition their subscriptions.

  • Phase 1 – March 10, 2022: Partners can no longer place new commercial subscription orders on the legacy platform.
  • Phase 2 – July 1, 2022: Partners can no longer renew legacy commercial subscriptions on the legacy platform.

Please note that existing legacy subscriptions can remain in effect with the legacy billing date, pricing, and policies until they reach the end of the term if the partner and customer so choose. But starting July 1, 2022, all legacy commercial subscriptions must be renewed on new commerce. Based on that date, the commercial subscription migration from legacy to new commerce will need to be completed by the end of June 2023, with the exception of any remaining legacy three-year Dynamics 365 subscriptions.
When a legacy subscription reaches the end of its term and can no longer be renewed on legacy, the partner will not receive an automatic notification and the legacy subscription will not automatically renew into new commerce. The partner will need to manually renew the subscription on new commerce and
choose either an annual or monthly term and the billing frequency, as well as the seat count.
Though legacy subscriptions can still be renewed on the legacy platform between March 10 and July 1, 2022, an existing legacy subscription that has not yet reached the end of its term cannot be repurchased on the same SKU on legacy as a means of extending the legacy term end date, as this would be considered a new subscription order on legacy and would therefore be blocked after March 10.

 

What specific benefits will my company receive from this migration?

Here are just some of the enhancements and benefits that partners and customers can take advantage of as a result of this transition:

  • A new monthly term that allows customers to cancel at the end of any month with no further payment obligation.
  • More customer billing options, such as annual billing for multi-year offers.
  • More options and flexibility in managing subscriptions (e.g., scheduling subscription changes such as SKU conversions at renewal).
  • New subscription upgrade and seat assignment capabilities.

 

Will all of the offers in the existing CSP catalog be available to sell in the new commerce experience catalog?

At the October launch, only commercial seat-based offers were made available for provisioning in new commerce. Government, education/academic, and charity/non-profit offers will be added to the new commerce catalog in the future (date TBD).

 

Will there be any special pricing or discounts to encourage partners to move existing business or put new orders on new commerce in CSP?

Yes, starting on January 10, 2022, monthly and annual term commercial seat-based offers in new commerce will be priced at a discount – monthly term offers at the regular price of annual term offers (instead of the usual 20% premium pricing), and a 5% discount off annual term offers. These discounts will apply to all seat-based offer types except Windows 365 and for up to 2,400 seats per subscription. Monthly term promotional pricing will be in effect through June 2022; annual term promotional pricing will be in effect through March 2022, with the possibility of being extended through June 2022 (with advance notice provided to partners; promo discounts not applicable in Brazil). More details can be found in the Global Promo Readiness Guide and the Operating Guide for this release. 

 

What is the new cancellation policy in new commerce and how does it differ from the legacy policy?

In the legacy CSP experience, an option to cancel a subscription was not available. Instead, a partner could suspend a subscription to stop the partner billing for it, and the subscription would eventually expire if not renewed at the end of the term. In new commerce, a seat-based subscription of any term length can be canceled but only within the first 72 hours of the term, with a prorated refund (proration calculated daily).
After that first 72 hours, no cancellation is possible; the partner will continue to be billed for the remainder of the term or will not receive a prorated refund if the subscription was billed upfront for the entire term. For more details please read the following article NCE Cancellation policy.

The new cancellation policy applies only to license-based/seat-based subscriptions such as M365, D365, and Windows 365, which are billed in advance. Azure subscriptions are billed based on consumption over the previous month, so cancellation would simply end consumption and therefore the billing.

 

Does the new cancellation policy apply to all subscriptions in CSP?

No, it applies only to license-based/seat-based subscriptions such as M365, D365, and Windows 365,  which are billed in advance. Azure subscriptions are billed based on consumption over the previous month, so cancellation would simply end consumption and therefore the billing.

 

Does the 7 days window for cancellation and seat reduction in new commerce only apply to business days? And does the cancellation window also exclude holidays?

The 7 days at the beginning of each seat-based subscription term in new commerce, during which a partner can cancel the subscription or reduce seats on that subscription, includes all days of the week and does not exclude weekend days or holidays. Note that the 7 days cancellations and seat-reduction period begin at the time on the clock at which the subscription order or renewal is made. 

 

What are the refund policies for cancellation?

A partner can receive a prorated refund of the initial subscription payment of the term only within the first 7 days after the order is placed or renewed (proration calculated daily). After those first 7 days of the term, the subscription cannot be canceled and payment for the remainder of the term must be made by the partner. For more details please read the following article New refund terms.

 

I’ve heard that Europe requires a full refund if a subscription is canceled within 14 days. If this is true, how can Microsoft require cancellation within 7 days? 

The 14-day withdrawal rule is part of the EU Consumer Rights Directive, which applies to consumer sales.  The CSP program is a commercial channel, intended for sales to commercial customers. The Microsoft Customer Agreement (“MCA”) expressly limits the scope of the license to “business purposes.” If CSP  partners sell Microsoft Products to consumers, they are responsible for complying with applicable consumer protection laws. 

 

Why do monthly term subscriptions cost more than annual-term ones in new commerce?

The new monthly term subscriptions in new commerce are billed by Microsoft at a 20% higher price than annual-term offers of the same type because they give the partner the ability to cancel on behalf of the customer at the end of any monthly term, instead of incurring additional payments for the remainder of an annual term. The premium pricing is in line with standard practice in the Microsoft Web Direct program and in other industries – for example, an online media subscription in which the customer pays more for a month-to-month subscription than for an annual term commitment.

NOTE: Some commercial seat-based offers in new commerce do not have the monthly term option currently available; see the CSP catalog and pricing list to confirm monthly-term availability.

 

Will there be a provision to cancel an annual-term or multi-year subscription if a customer goes bankrupt or stops paying?

The partner is responsible for payment for the subscription term if the subscription is not canceled within the first 7 days of the term. This policy applies to all term lengths. The partner may request cancellation enablement from Microsoft if cancellation within the first 7 days of the term failed due to an error or technical issue on the part of Microsoft.

The partner is responsible for payment of any outstanding amounts regardless of whether the customer cannot or will not pay for the subscription due to dissolution of the business relationship or commercial disagreement with the partner, customer financial insolvency, the merger or acquisition of the customer company, or other reasons not directly related to Microsoft’s ability to provide the services.

We encourage partners to perform credit-worthiness checks on customers and to advise customers with uncertain financial situations to consider purchasing monthly term subscriptions in new commerce. 

 

Can monthly term subscriptions be changed to annual terms easily in new commerce? Some businesses need subscriptions or additional seats only during peak times of the year, for example.

Yes, a customer’s subscription can be changed from monthly term to annual term in new commerce. The following month’s reconciliation file will include a credit for the prorated difference that is paid in advance (reflecting the 20% less expensive price for annual), and the annual term charge will be effective from the date the subscription term is changed. However, an annual term subscription in new commerce cannot be changed to a monthly term subscription except for the first 7 days of the term (through cancellation and repurchase) and at the time of renewal, as the annual term subscription cannot be canceled after the first 7 days of the term.

 

To which new commerce offers should I transition my legacy subscription customers?

The transition to the new commerce experience is the time to assess each customer’s needs and develop a holistic transformation strategy, including an opportunity to increase seat counts, plan for upgrades, and upsell other solutions and value-added services.
For example:

  • Customers with a stable or expanding workforce will be attracted to annual or multi-year term offers due to price predictability.
  • Customers with variability in the workforce due to seasonality or business uncertainty will likely prefer monthly term offers that allow cancellation or seat reduction at the end of any month’s term.

 

Can the customer have a combination of annual and monthly terms on the same offer to allow for seasonal or temporary users on the monthly term? 

Yes, the customer could have both monthly term and annual term subscriptions for the same seat-based offer at the same time with the appropriate number of seats in each term to accommodate its permanent
and seasonal employees.

 

Will a customer be able to increase or reduce seat counts on a subscription in the middle of the term in new commerce?

The seat count on a subscription can be increased during the middle of an annual term, with billing adjustments reflected on the next invoice and reconciliation file. But if more than 7 days have elapsed since the subscription order was placed or renewed, the seat count cannot be decreased until the next renewal of the subscription. This policy is in line with current market practices for per-user subscription plans. For monthly term subscriptions, the seat count can be increased or decreased at renewal at the end of the month term. A seat-count decrease within the first 7 days of a subscription term (after either initial purchase or renewal) can be made via self-serve in Partner Center or through the API.

 

Will I be able to sell Windows 365 as part of the new commerce experience in CSP?

Windows 365, announced in July 2021 and launched as a product in August 2021, is the world's first cloud PC for every organization, securely streaming the Windows experience -- including desktop, apps,  processing power, storage, and more -- to any customer device.1,2 The cloud PC experience can scale to fit customers’ needs and is easy to deploy without the need for VDI expertise. Windows 365 was made available in the current CSP experience in August 2021, and in CSP new commerce in October 2021. The following options and conditions apply to Windows 365 in CSP new commerce:

  • It is available only through the new monthly term offer (compared with availability only with annual terms in the current CSP experience).
  • The pricing for the monthly term offer for Windows 365 in new commerce is the same as for annual term seat-based offers. 
  • The monthly term option in new commerce allows customers to try Windows 365 with no long-term commitment and to adjust the number of users monthly with per-user pricing.
  • The same cancellation policy applies to Windows 365 in new commerce that’s in effect for all other seat-based offers.
  • Any promos that are available for other seat-based offers in new commerce will not apply to Windows 365.
  • Lastly, new Windows 365 features and future enhancements will only be made available on the new commerce offer in CSP.
    1 Internet access is required, fees may apply.
    2 Please see Windows 365 FAQ for a list of supported devices.

 

With an upgrade from E3 to E5, for example, how long does the customer have to move users to a new SKU?

After an upgrade from E3 to E5 the customer might have more assigned seats than purchased seats for E3. There is no enforcement or duration within which the customer has to reassign licenses from E3 to E5, but they would get an alert message in M365 Admin Center saying that they are at risk of being non-compliant.

 

When I order a subscription with a monthly term, does the price at the time of order remain in effect as long as the subscription is active?
No, at each monthly renewal of the subscription on a monthly term, the price charged to the partner for the next month’s term will be the price in effect at the time of renewal, not the price in effect when the subscription was originally purchased. However, an annual term subscription’s pricing is locked for the entire year’s term; when that subscription renews, it will be charged at the price in effect at that time. 

 

I’m billed by Microsoft for Azure plan subscriptions on the 8th of each month. Will that be the case for Microsoft 365 and other seat-based offers? 


Yes, monthly partner invoices for new commerce transactions of any offer type will be posted in the partner tenants between the sixth and eighth day of each month. As a result, partners should adjust their internal accounting and billing schedules and systems to accommodate this standardized new commerce billing date for seat-based offers sold in new commerce.

With the inclusion of seat-based offers in new commerce, partners will be able to track and manage charges for these offers in the Azure Cost Management tool, along with the Azure plan. More details are available here.

 

When I migrate subscriptions from legacy or purchase add-ons separately in new commerce, is there any way I can have all of a customer’s subscriptions on new commerce renewed on the same date?

Current plans are for Microsoft to provide coterminosity functionality in the calendar year 2022, to allow a  partner to align a customer’s subscriptions with the same end date, enabling those subscriptions to all  renew at the same time.

 

If I upgrade a customer’s subscription midterm in new commerce (for example M365 E3 to E5), will I be assessed any penalty, or will I be billed for both the original and upgraded versions of the subscription for the remainder of the original subscription’s term?

An upgrade midterm simply shifts the subscription charges and seats to the new SKU; there will be no penalty or double-billing as a result of this upgrade transition scenario.

 

In new commerce, will partners be billed in the currency of the partner country or the currency of the customer’s country? 

All types of CSP offers purchased in new commerce will be billed to the partner in the currency of the partner’s tenant country, not the currency of the customer’s country. This is a change from the original billing policy in new commerce that applied to Azure plan, Azure RI, and Software Subscriptions.

 

New Commerce Experience roadmap:

 

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