Microsoft Will Let Partners Get Creative With Pay-when-you-want SaaS Plans

Microsoft partners can now tailor private offers that allow buyers to vary the amount and timing of payments for some SaaS products and services.

As explained in a May 5 blog post, private offers mean a customer that agrees to acquire $25 million of Microsoft goodies over two years could pay nothing for two months, then pay $10 million to cover the first year of use, then make two installments of $10 million and $5 million at different times during the second year.

Microsoft also offered the example of a single-year $10 million deal in which the customer pays $2 million in the first and third quarters, and $3 million in the second and fourth quarters.

In a post to its newsfeed for partners, Microsoft wrote the private offers are designed to “align with … customers’ budget cycles and purchasing preferences”.

“This streamlines sales and accelerates deal velocity,” wrote Microsoft Senior Product Manager Aboli Moroney.

Partners dream of scoring more wins with less effort, so Microsoft’s channel will be hoping the software goliath is right about this.

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As we reported in 2020, vendors generally claim that subscriptions and pay-as-you-go schemes help customers shift the cost of tech from a capital expenditure to an operational expenditure. But some buyers gripe that paying the same subscription fees each quarter doesn’t reflect the reality of seasonal cash flow fluctuations, such as retail sales leading up to the Christmas holidays. We’ve also heard some buyers argue that vendors all-but forcing them onto subscriptions requires so much cash that they struggle to set aside capital to make non-tech investments that reduce operational expenditure.

If such sentiment is widespread, Microsoft’s move to allow variable subscription fees makes a lot of sense - especially given the uncertainty around the US economy in the wake of Trump's whipsaw tariffs policy, which many economists and business leaders believe will drive the US into recession.

"With over 100 partners in our private preview, we're excited to make this capability publicly available. Many of these partners have achieved remarkable success, closing deals worth millions of dollars," the company said in its announcement.

The private offers apply only to Microsoft’s SaaS products, VM software reservations, and professional services. Channel players that are members of the Microsoft AI Cloud Partner Program and sell on the Microsoft commercial marketplace can propose up the custom deals.

Private offers can have up to ten included product plans. Each plan has its own billing frequency and may include a unique flexible schedule.

Partners can use private for deals up to $100 million and 70 installments.

Would you move to a flexible plan of this sort? Let us know in the comments. ®