In my previous blog post, I discussed the changes in Microsoft competencies with you. This is important to you because you must at least have attained one competency from Microsoft to receive the incentives. In this article, I will be looking at the new incentive calculations for the coming fiscal year. After studying the Incentives Guide for Indirect Resellers (FY20) it became clear to me that Microsoft is focusing even more strongly on generating new business. To achieve this, they lower the Core Incentives and increase the reward for sales at new customers.
Structure of the Incentives from October 1, 2019
- First, a brief summary of current and future Core Incentive fees. The Core Incentive is paid based on your monthly revenue per product category. For Dynamics 365 and Azure the percentage drops by 2%, for Microsoft 365 and Azure the percentage drops by 4% and for Azure RI the percentage remains the same, namely: 10%.
- In addition to Core Incentives, Microsoft also has Global Accelerators including the
Global Strategic Product Accelerator for Microsoft E3 / E5, Microsoft 365 Business, Office 365 Business Premium and Dynamics 365 Business Central. When these licenses are sold, you will receive an additional incentive of 5% as a partner. Compared to the previous fiscal year (FY19), this is a percentage increase of 3%.
- The biggest changes can be seen in the Customer Adds Accelerator. In the past year, Microsoft awarded an additional incentive fee of 2% on total revenue from new customers. From 1 October 2019, Microsoft will pay an amount of 20% of the annual turnover as a (one-off) bonus for every new customer with a turnover of more than 1.000 USD per month. This also applies to the additional license revenue growth for the first year.
An important detail; the Customer Add Accelerator is available for all three Microsoft Cloud Solutions: Intelligent Cloud (Azure with the exception of RI), Modern Workplace (O365 / M365) and Business Applications (Dynamics 365).
Example Incentives for Dynamics 365 Business Central SaaS
When you create a new Dynamics 365 Business Central customer from October 2019 you are expected to receive: 3.806 USD for the first year based on:
– Core Incentive = 6% over 1.050 x 12 months = 756 USD.
– Global Strategic Product Accelerator = 5% over 1.050 x 12 months = 530 USD.
– CSP Customer Adds Accelerator = 20% over 1.050 x 12 months = 2.520 USD.
*The above calculation does not include local accelerators. If local accelerators apply to your region, you will receive a letter from Regional Operations Centers (ROCs). All calculations above are based on Microsoft list prices.
Payment of the Incentives from January 1, 2020
From January 1, 2020, Microsoft is changing the way Incentives are paid. To date, Incentives are always paid in the form of rebates. Starting next year, the incentives fee will be split into two components: 60% rebate and 40% co-op.
Microsoft then places 40% of the amount separately on a co-op balance sheet account. As a partner, you can declare your marketing costs from this account. Practical detail: Microsoft has determined that claiming the co-op balance sheet account is only possible in the half-year after you have earned the amount, or co-op that you earn in H2 – FY20 can then be declared in H1 – FY21 and paid out.
Finally, if you have any doubts about the information from your incentives overview or previously received incentive payments, we advise you to contact the Microsoft Incentives team via e-mail: email@example.com. For advice in the field of competencies or claiming incentives, you can always contact QBS group by contacting Partner Success Operations via the QBS partner portal.