Most organisations never think about how their Microsoft reseller or CSP partner actually gets paid, treating it as an internal channel detail unrelated to their own licensing decisions. A significant restructuring of that payment model, effective through FY27, is worth understanding directly, because it genuinely changes what a partner is now commercially motivated to recommend. As of 1 July 2026, Core incentives for Microsoft 365 and Dynamics 365 are gone for indirect resellers, replaced by a Growth Accelerator that scales specifically with genuine growth rather than book size, with rates moving from roughly seven and a half up to twelve and a half percent depending on verified expansion.
What Replaced the Old Flat Rebate
In place of that flat, passive rebate, Microsoft introduced two new earning mechanisms built around genuine growth rather than simply holding an existing book of business. The core shift moves partners away from flat, run-rate rebates on Modern Work and Dynamics 365 toward earning that follows growth and premium adoption, with a growth accelerator specifically rewarding year-over-year growth, new-to-offer wins, seat expansion, and adoption, while Azure remains structurally unchanged and continues to reward consumption and growth as it always has.
A second, separate mechanism launched from 1 October 2026 pays partners directly at the point of sale for specific growth behaviours. Growth Margins represent genuine upfront partner margin rather than a rebate claimed after the fact, earned through three specific qualifying growth motions: new-to-offer wins, seat expansion, and verified adoption, distinct from the customer-facing discounts a partner might separately offer.
Why the Cheapest Products Now Earn Nothing
The other side of this restructuring is what stopped earning incentive entirely, and it is worth understanding which products fall into that category. Low run-rate, non-strategic SKUs on Modern Work, the lower-cost, entry-level products in the Microsoft 365 lineup, now earn a partner nothing in incentive beyond standard resale margin, a genuine change from the prior model where holding any CSP business at all generated a baseline rebate regardless of which specific products made up that business.
That change creates a direct, structural incentive for a partner to steer a customer’s conversation toward premium, AI-enabled, and security-rich products, since those are precisely the categories now carrying meaningful margin under the new model, while the more basic products a customer might genuinely only need are commercially far less attractive for a partner to keep recommending.
Why This Matters Even If Your Advice Has Always Been Good
None of this is an argument that every partner recommendation under the new model is self-serving, or that organisations should treat every upgrade suggestion with suspicion. Many genuine business cases exist for moving to premium products, and a good partner relationship survives a change in the underlying incentive structure without becoming adversarial. It is, however, a reasonable and increasingly necessary practice to understand explicitly how a specific recommendation affects the partner’s own commercial position, since a recommendation that happens to align with the partner’s strongest current incentive deserves the same scrutiny as any other vendor recommendation, not automatic trust simply because the relationship predates this restructuring.
The Direct Question Worth Asking
Given how openly this shift has been discussed across the partner channel itself, asking a partner directly how a specific recommendation affects their own margin under the new FY27 structure is a reasonable question rather than an accusatory one. A partner whose margin now depends on proving genuine seat expansion, premium SKU adoption, and verified workload growth has a new reason to raise exactly those conversations with a customer, whether or not the customer was already planning to have them, and understanding that dynamic openly tends to produce a more useful conversation than either ignoring it or assuming bad faith.
What to Actually Do With This Information
The practical response is not switching partners reflexively or treating every recommendation with suspicion, since the underlying products and genuine business cases for adopting them have not changed simply because the incentive structure behind them has. It is building a habit of asking directly what growth motion, if any, a specific recommendation qualifies for under the new incentive structure, and weighing that answer as one input alongside the recommendation’s actual technical and commercial merit for the organisation’s own needs, rather than accepting or rejecting advice purely on the strength of who is offering it.
Conclusion
Microsoft’s FY27 restructuring of how it pays CSP partners represents a genuine, structural shift away from flat rebates tied simply to holding business, toward margin that follows growth, premium adoption, and specific verified customer behaviours, and that shift changes what a partner is commercially motivated to recommend regardless of that partner’s individual integrity.
Asking a partner directly and openly how a given recommendation aligns with the current incentive structure is a reasonable, increasingly normal part of any Microsoft licensing conversation, and treating that question as routine due diligence rather than an accusation is what keeps a genuinely good partner relationship transparent as the underlying commercial incentives continue to evolve.
