Commercial marketplace transact capabilities

This article describes pricing, billing, invoicing, and payout considerations for the Microsoft commercial marketplace.

Transactions by listing option

Either the publisher or Microsoft is responsible for managing software license transactions for offers in the commercial marketplace. The listing option you choose for your offer determines who manages the transaction. For availability and explanations of each publishing option, see Introduction to listing options

Contact me, free trial, and BYOL options

Publishers can choose the Contact me and Free trial, options for promotional and user acquisition purposes. For some offer types, publishers can choose the bring your own license (BYOL) option to enable customers to purchase a subscription to your offer using a license they’ve purchased directly from you. With these options, Microsoft doesn't participate directly in the publisher's software license transactions and there's no associated transaction fee, so publishers keep all of that revenue.

With these options, publishers are responsible for supporting all aspects of the software license transaction. This includes but is not limited to order, fulfillment, metering, billing, invoicing, payment, and collection. With the Contact me listing option, publishers keep 100% of publisher software licensing fees collected from the customer.

Transact publishing option

Choosing to sell through Microsoft takes advantage of Microsoft commerce capabilities and provides an end-to-end experience from discovery and evaluation to purchase and implementation. A transactable offer is one in which Microsoft facilitates the exchange of money for a software license on the publisher’s behalf. Transact offers are billed against an existing Microsoft subscription or credit card, allowing Microsoft to host cloud marketplace transactions on behalf of the publisher.

You choose the transact option when you create a new offer in Partner Center. This option will appear only if transact is available for your offer type.

Transact overview

When using the transact option, Microsoft enables the sale of third-party software and deployment of some offer types to the customer's Azure subscription. The publisher must consider the billing of infrastructure fees and your own software licensing fees when selecting a pricing model for an offer.

The transact publishing option is currently supported for the following offer types:

Offer type Billing cadence Metered billing Pricing model
Azure Application
(Managed application)
Monthly Yes Usage-based
Azure Virtual Machine Monthly * No Usage-based, BYOL
Software as a service (SaaS) Monthly and annual Yes Flat rate, per user, usage-based.

* Azure Virtual Machine offers support usage-based billing plans. These plans are billed monthly for hourly use of the subscription based on per core, per core size, or per market and core size usage.

Metered billing

The Marketplace metering service lets you specify pay-as-you-go (consumption-based) charges in addition to monthly or annual charges included in the contract (entitlement). You can charge usage costs for marketplace metering service dimensions that you specify such as bandwidth, tickets, or emails processed. For more information about metered billing for SaaS offers, see Metered billing for SaaS using the commercial marketplace metering service. For more information about metered billing for Azure Application offers, see Managed application metered billing.

Billing infrastructure costs

For virtual machines and Azure applications, Azure infrastructure usage fees are billed to the customer's Azure subscription. Infrastructure usage fees are priced and presented separately from the software provider's licensing fees on the customer's invoice.

For SaaS Apps, the publisher must account for Azure infrastructure usage fees and software licensing fees as a single cost item. It is represented as a flat fee to the customer. The Azure infrastructure usage is managed and billed to the publisher directly. Actual infrastructure usage fees are not seen by the customer. Publishers typically opt to bundle Azure infrastructure usage fees into their software license pricing. Software licensing fees aren't metered or based on user consumption.

Pricing models

Depending on the transaction option used, subscription charges are as follows:

  • Get it now (Free): No charge for software licenses. Free offers can’t be converted to a paid offer. Customers must order a paid offer.
  • Bring your own license (BYOL): If an offer is listed in the commercial marketplace, any applicable charges for software licenses are managed directly between the publisher and customer. Microsoft only charges applicable Azure infrastructure usage fees to the customer’s Azure subscription account.
  • Subscription pricing: Software license fees are presented as a monthly or annual, recurring subscription fee billed as a flat rate or per-seat. Recurrent subscription fees are not prorated for mid-term customer cancellations, or unused services. Recurrent subscription fees may be prorated if the customer upgrades or downgrades their subscription in the middle of the subscription term.
  • Usage-based pricing: For Azure Virtual Machine offers, customers are charged based on the extent of their use of the offer. For Virtual Machine images, customers are charged an hourly Azure Marketplace fee, as set by the publisher, for use of virtual machines deployed from the VM images. The hourly fee may be uniform or varied across virtual machine sizes. Partial hours are charged by the minute. Plans are billed monthly.
  • Metered pricing: For Azure Application offers and SaaS offers, publishers can use the Marketplace metering service to bill for consumption based on the custom meter dimensions they configure. These changes are in addition to monthly or annual charges included in the contract (entitlement). Examples of custom meter dimensions are bandwidth, tickets, or emails processed. Publishers can define one or more metered dimensions for each plan but a maximum of 30 per offer. Publishers are responsible for tracking individual customer usage, with each meter defined in the offer. Events should be reported to Microsoft within an hour. Microsoft charges customers based on the usage information reported by publishers for the applicable billing period.
  • Free trial: No charge for software licenses that range from 30 days up to six months, depending on the offer type. If publishers provide a free trial on multiple plans within the same offer, customers can switch to a free trial on another plan, but the trial period does not restart. For virtual machine offers, customers are charged Azure infrastructure costs for using the offer during a trial period. Upon expiration of the trial period, customers are automatically charged for the last plan they tried based on standard rates unless they cancel before the end of the trial period.

Note

Offers that are billed according to consumption after a solution has been used are not eligible for refunds.

Publishers who want to change the usage fees associated with an offer, should first remove the offer (or the specific plan within the offer) from the commercial marketplace. Removal should be done in accordance with the requirements of the Microsoft Publisher Agreement. Then the publisher can publish a new offer (or plan within an offer) that includes the new usage fees. For information, about removing an offer or plan, see Stop selling an offer or plan.

Free, Contact me, and bring-your-own-license (BYOL) pricing

When publishing an offer with the Get it now (Free), Contact me, or BYOL option, Microsoft does not play a role in facilitating the sales transaction for your software license fees. The publisher keeps 100% of the software license fees.

Usage-based and subscription pricing

When publishing an offer as a usage-based or subscription transaction, Microsoft provides the technology and services to process software license purchases, returns, and charge-backs. In this scenario, the publisher authorizes Microsoft to act as an agent for these purposes. The publisher allows Microsoft to facilitate the software licensing transaction. The publisher, retain your designation as the seller, provider, distributor, and licensor.

Microsoft enables customers to order, license, and use your software, subject to the terms and conditions of both Microsoft's commercial marketplace and your end-user licensing agreement. You must either provide your own end-user licensing agreement or select the Standard Contract when creating the offer.

Free software trials

For transact publishing scenarios, you can make a software license available free for 30 to 120 days, depending on the subscription. Customers will be changed for applicable Azure infrastructure usage.

Examples of pricing and store fees

Usage-based

Usage-based pricing has the following cost structure:

Your license cost $1.00 per hour
Azure usage cost (D1/1-Core) $0.14 per hour
Customer is billed by Microsoft $1.14 per hour

In this scenario, Microsoft bills $1.14 per hour for use of your published VM image.

Microsoft bills $1.14 per hour
Microsoft pays you 80% of your license cost $0.80 per hour
Microsoft keeps 20% of your license cost $0.20 per hour
Microsoft keeps 100% of the Azure usage cost $0.14 per hour

Bring Your Own License (BYOL)

BYOL has the following cost structure:

Your license cost License fee negotiated and billed by you
Azure usage cost (D1/1-Core) $0.14 per hour
Customer is billed by Microsoft $0.14 per hour

In this scenario, Microsoft bills $0.14 per hour for use of your published VM image.

Microsoft bills $0.14 per hour
Microsoft keeps the Azure usage cost $0.14 per hour
Microsoft keeps 0% of your license cost $0.00 per hour

SaaS app subscription

SaaS subscriptions can be priced at a flat rate or per user on a monthly or annual basis. If you enable the Sell through Microsoft option for a SaaS offer, you have the following cost structure:

Your license cost $100.00 per month
Azure usage cost (D1/1-Core) Billed directly to the publisher, not the customer
Customer is billed by Microsoft $100.00 per month (publisher must account for any incurred or pass-through infrastructure costs in the license fee)

In this scenario, Microsoft bills $100.00 for your software license and pays out $80.00 or $90.00 to you depending on whether the offer qualifies for a reduced store service fee.

Microsoft bills $100.00 per month
Microsoft pays you 80% of your license cost
* Microsoft pays you 90% of your license cost for any qualified SaaS apps
$80.00 per month
* $90.00 per month
Microsoft keeps 20% of your license cost
* Microsoft keeps 10% of your license cost for any qualified SaaS apps.
$20.00 per month
* $10.00

Commercial marketplace service fees

We charge a 20% standard store service fee when customers purchase your transact offer from the commercial marketplace. For details of this fee, see section 5c of the Microsoft Publisher Agreement.

For certain transact offers that you publish to the commercial marketplace, you may qualify for a reduced store service fee of 10%. For an offer to qualify, it must have been designated by Microsoft as Azure IP Co-sell incentivized. Eligibility must be met at least five business days before the end of each calendar month to receive the Reduced Marketplace Service Fee. Once eligibility is met, the reduced service fee is awarded to all transactions effective the first day of the following month until Azure IP Co-sell incentivized status is lost. For details about IP co-sell eligibility, see Requirements for co-sell status.

The Reduced Marketplace Service Fee applies to Azure IP Co-sell incentivized SaaS, VMs, Managed apps, and any other qualified transactable IaaS solutions made available through the commercial marketplace. Paid SaaS offers associated with one Microsoft Teams app or at least two Microsoft 365 add-ins (Excel, PowerPoint, Word, Outlook, and SharePoint) and published to Microsoft AppSource can also qualify for this discount.

Customer invoicing, payment, billing, and collections

Invoicing and payment: You can use the customer's preferred invoicing method to deliver subscription or PAYGO software license fees.

Enterprise Agreement: If the customer's preferred invoicing method is the Microsoft Enterprise Agreement, your software license fees will be billed using this invoicing method as an itemized cost, separate from any Azure-specific usage costs.

Credit cards and monthly invoice: Customers can pay using a credit card and a monthly invoice. In this case, your software license fees will be billed just like the Enterprise Agreement scenario, as an itemized cost, separate from any Azure-specific usage costs.

Free credits and monetary commitment: Some customers choose to prepay Azure with a monetary commitment in the Enterprise Agreement or have been provided free credits to use for Azure usage. Although these credits can be used to pay for Azure usage, they can't be used to pay for publisher software license fees.

Billing and collections: Publisher software license billing is presented using the customer-selected method of invoicing and follows the invoicing timeline. Customers without an Enterprise Agreement in place are billed monthly for marketplace software licenses. Customers with an Enterprise Agreement are billed monthly via an invoice that is presented quarterly.

When subscription or Pay-as-You-Go (also called usage-based) pricing models are selected, Microsoft acts as the agent of the publisher and is responsible for all aspects of billing, payment, and collection.

Publisher payout and reporting

Any software licensing fees collected by Microsoft as an agent are subject to a 20% transaction fee unless otherwise specified and are deducted at the time of publisher payout.

Customers typically purchase using the Enterprise Agreement or a credit-card enabled pay-as-you-go agreement. The agreement type determines billing, invoicing, collection, and payout timing.

Note

All reporting and insights for the transact publishing option are available via the Analytics section of Partner Center.

Billing questions and support

For more information and legal policies, see the Microsoft Publisher Agreement. For help with billing questions, contact commercial marketplace publisher support.

Transact requirements

This section covers transact requirements for different offer types.

Requirements for all offer types

  • A Microsoft account and financial information are required for the transact publishing option, regardless of the offer's pricing model.
  • Mandatory financial information includes payout account and tax profile.

For more information on setting up these accounts, see Manage your commercial marketplace account in Partner Center.

Requirements for specific offer types

The ability to transact through Microsoft is available for the following commercial marketplace offer types only. This list provides the requirements for making these offer types transactable in the commercial marketplace.

  • Azure application (solution template and managed application plans: In some cases, Azure infrastructure usage fees are passed to the customer separately from software license fees, but on the same billing statement. However, if you configure a managed app plan for ISV infrastructure charges, the Azure resources are billed to the publisher, and the customer receives a flat fee that includes the cost of infrastructure, software licenses, and management services.

  • Azure Virtual Machine: Select from free, BYOL, or usage-based pricing models. On the customer's Azure bill, Microsoft presents the publisher software license fees separately from the underlying Azure infrastructure fees. Azure infrastructure fees are driven by use of the publisher’s software.

  • SaaS application: Must be a multitenant solution, use Azure Active Directory for authentication, and integrate with the SaaS Fulfillment APIs. Azure infrastructure usage is managed and billed directly to you (the publisher), so you must account for Azure infrastructure usage fees and software licensing fees as a single cost item. For detailed guidance, see How to plan a SaaS offer for the commercial marketplace.

Private plans

You can create a private plan for an offer, complete with negotiated, deal-specific pricing, or custom configurations.

Private plans enable you to provide higher or lower pricing to specific customers than the publicly available offering. Private plans can be used to discount or add a premium to an offer. Private plans can be made available to one or more customers by listing their Azure subscription at the plan-level.

Next steps

  • Review the publishing patterns by online store for examples on how your solution maps to an offer type and configuration.
  • Publishing guide by offer type.