Microsoft SMB Partner Incentives for CSP Partners (Financial Incentives)

Microsoft offers a range of financial incentives to reward Cloud Solution Provider (CSP) partners for driving small and medium business (SMB) customer success. These incentives are designed to encourage CSP partners to increase cloud consumption, add new customers, and sell strategic Microsoft products in the SMB segment. Below is a comprehensive list of the financial incentives currently available to CSP partners (particularly relevant to SMB), along with a brief description of each:

Core Rebate Incentives (Baseline Earnings)

These are base incentive rates applied to the revenue billed through the CSP program in different solution areas. They serve as the foundational rebate that partners earn on all qualifying sales:

Core Incentive – Modern Work & Security: CSP partners earn a base rebate of ~4% on billed revenue for Modern Work and Security subscriptions (e.g. Microsoft 365, Office 365, EMS, and related SMB Microsoft online services)[1]. This is the standard incentive for selling Microsoft cloud productivity and security solutions. (For example, selling Microsoft 365 Business Premium or Office 365 subscriptions to SMB customers yields roughly a 4% incentive on the partner’s billed revenue.)
Core Incentive – Business Applications: Partners earn a base rebate of ~4.75% on billed revenue for Business Applications subscriptions (such as Dynamics 365, Power Platform, and other Microsoft business app offerings)[2][1]. This slightly higher base rate reflects Microsoft’s push for partners to drive adoption of Dynamics 365 and related apps in the SMB market.
Core Incentive – Azure (Consumption): CSP direct-bill partners can earn a base rebate of ~4% on Azure billed revenue/consumption under the CSP program[1]. This core incentive rewards partners for Azure usage by their customers. (Note: In the indirect CSP model, Azure incentives are typically received by the Indirect Provider, but often a similar incentive or margin is passed along to the reseller.)

Eligibility: To receive core rebates, partners must be enrolled in the Microsoft AI Cloud Partner Program (formerly Microsoft Partner Network) with an active CSP agreement and meet any program requirements such as minimum revenue threshold (e.g. $25K trailing twelve months) and proper MPN IDs configured in Partner Center[2]. Once enrolled and selling qualifying products, these rebates accrue automatically.

Customer Add Accelerators (New Customer Bonus)

Microsoft provides accelerator incentives for partners who bring in new customers on Microsoft cloud services. These are one-time (or time-limited) boosts in incentive rate for acquiring a new SMB customer in a solution area:

New Customer “Customer Add” Accelerator – Modern Work & Security: An additional ~10% incentive is earned on the first-year billed revenue for Modern Work & Security subscriptions when you onboard a new customer (one who has not previously purchased those services)[1]. This sizable bonus rewards partners for finding and registering new SMB clients for Microsoft 365 or security workloads.
New Customer “Customer Add” Accelerator – Business Applications: An additional ~20% incentive on first-year billed revenue for Business Applications when adding a new Dynamics 365/Power Platform customer[1]. Microsoft offers a higher accelerator in this category to encourage partners to recruit new SMB customers for Dynamics 365 solutions. (This can significantly increase the partner’s earnings for the first year of a new customer’s Dynamics subscription.)

Note: Customer Add incentives typically apply only for the initial period (for example, the first 12 months of the subscription for a new customer tenant). Partners must register the new customer enrollment properly to qualify[1]. These accelerators may be tied into the Microsoft Commerce Incentives (MCI) program, which consolidates various earning opportunities for customer additions.

Strategic Product Accelerators

To drive sales of specific strategic solutions in the SMB market, Microsoft offers extra incentives on top of the core rebates when partners sell certain products deemed high priority:

Global Strategic Product Accelerator – Tier 1 Products: An additional ~5% incentive for selling designated Tier 1 strategic products[1]. Tier 1 typically includes solutions like Microsoft 365 E3, Microsoft 365 E5, Microsoft 365 Business Premium, and Dynamics 365 Business Central[1]. These are key offerings for SMB customers (e.g., Business Premium is a flagship SMB bundle), so Microsoft rewards partners with a 5% bonus on those sales.
Global Strategic Product Accelerator – Tier 2 Products: An additional ~10% incentive for selling Tier 2 strategic products[1]. Tier 2 products often include certain Dynamics 365 and Power Platform SKUs that Microsoft is keen to grow in SMB, such as Dynamics 365 Sales Professional and Power Apps licenses[1]. These products come with a higher 10% accelerator, reflecting their strategic importance and perhaps lower current market penetration (hence a bigger incentive to encourage partner focus).
Global PSTN Calling & Conferencing Accelerator: An additional ~20% incentive for selling Microsoft’s voice and conferencing add-ons, such as Teams PSTN Calling Plans and Audio Conferencing licenses[1]. This is a substantial accelerator (20%) to motivate partners to drive adoption of Microsoft’s telephony features in Teams for SMBs. It significantly boosts partner earnings on any phone system or calling plan SKU sales through CSP.
Nonprofit/TSI Product Accelerator: An additional ~12% incentive for selling to eligible Nonprofit organizations through CSP[1]. Microsoft’s Technology for Social Impact (TSI) offers discounted nonprofit pricing, and this 12% accelerator further incentivizes partners to support nonprofit customers by increasing the partner’s reward when transacting nonprofit-designated offers.

How Accelerators Work: These product accelerators stack on top of the core incentives. For example, if a CSP partner sells Microsoft 365 Business Premium to a new SMB customer, the partner earns the 4% core Modern Work rebate plus the 5% Tier 1 product accelerator plus (if a new customer) the 10% customer-add accelerator – totaling up to ~19% of that customer’s billed revenue in incentives for the first year[1][1]. These rates are subject to program terms and may be split between direct rebate and co-op marketing funds as specified by Microsoft’s incentive program[2].

Azure Reserved Instances Incentive

Azure Reservations (Consumption) Incentive: Partners earn an additional ~10% rebate on Azure reserved instance purchases or Azure prepaid one-year/three-year offers sold through CSP[1]. This incentive is designed to encourage partners to get customers to commit to longer-term Azure reservations (which provide cost savings to the customer and cloud consumption stability to Microsoft). The 10% incentive for Azure reservations is typically paid entirely as a rebate (not split with co-op)[1], directly boosting the partner’s margin on those sales.

Subscription Software Incentives

Subscription Software – Core and Strategic: Microsoft also provides incentives for traditional software sold as subscriptions via CSP (for example, certain on-premises software licenses now available under CSP billing). The incentive rates are roughly 1.25% for core software subscriptions and up to 6% for strategic software offerings[1]. “Strategic” software might include specific products Microsoft wants to promote even in CSP software form, hence a higher 6% incentive, whereas most other software subscriptions yield about 1.25%. (Examples could include Windows Server or SQL Server subscriptions under CSP, with certain products flagged for higher incentive.)

Program Notes and Partner Eligibility

Enrollment & Requirements: To receive these incentives, a partner must be enrolled in the incentive program via Partner Center. This involves having an active MPN/AI Cloud Partner Program membership, signing the Microsoft Partner Agreement, attaining any required competencies or Solutions Partner designations, and meeting minimum revenue thresholds (e.g., $25K in CSP revenue over the trailing 12 months)[2]. Partners should ensure their tax and banking information is up to date in Partner Center for payouts[2].
Rebate vs. Co-op Split: Many incentives are paid partly as rebates (cash paid directly to the partner) and partly as co-op marketing funds (which must be reinvested in eligible marketing activities). For example, a 4% incentive may be split into 60% rebate and 40% co-op by default[2]. Partners need to utilize co-op funds per Microsoft’s guidelines (for marketing, training, etc.) and claim them in Partner Center. Smaller partners not meeting a usage threshold for co-op may receive the entire incentive as rebate[2].
Timeframe and Changes: Incentive percentages and programs are updated on a fiscal year basis (Microsoft’s fiscal year runs July through June). The above figures are reflective of recent program guidance; however, Microsoft may adjust rates or categories each year[2]. Always refer to the latest Microsoft Incentives Guide and Product Addendum for the most current details on incentive rates and eligible SKUs[2]. (For instance, FY24/25 incentives continue the general structure listed above, with Modern Work, Business Apps, and Azure incentive opportunities, although specific rates or product inclusions can shift slightly.)
Benefits to Partners: These financial incentives significantly improve partner profitability. By combining base rebates with accelerators, CSP partners can earn double-digit percentage returns on certain sales[1][1]. This extra margin enables partners to invest in customer acquisition, provide discounts or value-added services to clients, and grow their SMB business with Microsoft. Essentially, the more value a partner delivers to Microsoft (new customers, strategic workloads, larger deployments), the more Microsoft returns value to the partner through these incentive payments.

Sources: The incentive categories and rates were obtained from Microsoft’s official CSP incentive program documentation[1][1] and partner guides. Always consult the latest Microsoft partner incentive resources for up-to-date information, as programs are subject to change. All incentives are subject to the terms of the Microsoft Commerce Incentive program and the Microsoft AI Cloud Partner Program guidelines[2].

References

[1] Purpose Rewards CSP Indirect Resellers for driving Cloud Solution …

[2] Purpose Rewards CSP Indirect Resellers for driving Cloud Solution …