If there’s one theme to Microsoft’s FY27 incentive changes, it’s that growth matters more than ever. Core incentives for Microsoft 365 and Dynamics 365 are going away, but Microsoft is shifting more earning opportunities toward partners who help customers adopt, expand, and realize more value from their Microsoft investments. Here are the five biggest changes for indirect resellers.
Core Incentives for Microsoft 365 and Dynamics 365 are Being Removed
One of the biggest changes in FY27 is the removal of Core incentives for Microsoft 365 and Dynamics 365 CSP transactions. In FY26, partners could earn a baseline incentive of 3.75% on Microsoft 365 and 4.0% on Dynamics 365 subscriptions. In FY27, those Core incentives are no longer available for indirect resellers. Azure will keep its consumption/reservation base rates. These changes went into effect on July 1, 2026.
Microsoft is now reallocating much of that investment into growth-focused incentives designed to reward partners who actively help customers expand their Microsoft footprint through net-new customers, new seats, upsell motions, and strategic workload adoption.
Microsoft 365 CSP
| Lever | FY26 | FY27 | Change |
|---|---|---|---|
| Core | 3.75% | N/A | Removed |
| Strategic Accelerator – Tier 1 (Business Premium, E3…) |
4% (US/Innovate markets) 3% (Scale) |
2.5% (flat) | Reduced |
| Strategic Accelerator – Tier 2 (E5, Copilot…) | 7% | 7% | Same |
| Calling & Conference PSTN | 20% | 20% | Same |
| Growth Accelerator | 7.5% | 12.5% | +5 pts |
Dynamics 365 CSP
| Lever | FY26 | FY27 | Change |
|---|---|---|---|
| Core | 4% | N/A | Removed |
| Strategic Accelerator – Tier 1 (Finance, SCM, Project Ops, HR) | 7% | 6% | Reduced |
| Strategic Accelerator – Tier 2 (Business Central) | 8% | 7% | Reduced |
| Growth Accelerator | 7.5% | 12.5% | +5 pts |
Growth Accelerator Becomes the Biggest Earning Opportunity
As Core incentives go away, Growth Accelerator becomes the best earning lever for many partners with rates for both Microsoft 365 and Dynamics 365 increasing from 7.5% to 12.5% in FY27. For indirect resellers, that 12.5% rate is the richest Growth Accelerator rate in the channel and 2.5 percentage points higher than the direct-bill partner rate. These changes went into effect on July 1, 2026.
Growth can come from adding new customers, increasing seat counts, expanding workloads, driving upsell motions, or helping customers adopt additional Microsoft solutions. The more measurable growth you create within your customer base, the greater the opportunity to earn. It’s important to note as always that Growth Accelerators only account for growth in Strategic Accelerators Tier 1 and Tier 2.
Azure Growth Incentives are Now Tiered
Azure is also receiving a growth-focused refresh. Instead of a single 7.5% Growth Accelerator rate, Microsoft is introducing a tiered structure that pays 7%, 10%, or up to 12%, depending on the workload tier, with the highest growth rates tied to select strategic workloads.
For partners helping customers modernize applications, move data workloads to Azure, strengthen security, or adopt AI-related services, these changes create additional opportunities to align profitability with customer outcomes. Strategic Azure workloads such as Fabric, Foundry, and Sentinel are examples of the types of services partners should prioritize and build growth plans around. These changes also went into effect on July 1, 2026.
Azure CSP
| Lever | FY26 | FY27 | Change |
|---|---|---|---|
| Consumption (PAYG) | 3% | 3% | Same |
| Reservation & Savings Plan | 3% | 3% | Same |
| Growth Accelerator | 7.5% (single) |
Tier 3: 12% Tier 2: 10% Tier 1: 7% |
Now tiered |
New COCP Rules Put the Focus on Growth
Updated August 2026: Microsoft has revised portions of its COCP guidance in response to partner feedback. The updates announced on August 1 will be applied retroactively, effective July 1.
FY27 introduced a new Change of Channel Partner (COCP) policy designed to ensure growth incentives reward net-new customer growth rather than customer ownership transfers. Under the original guidance, partners raised concerns that certain reseller and distributor transitions could unintentionally impact incentive eligibility.
Microsoft has since clarified that the following scenarios are not considered COCP events:
- Reseller changes under the same distributor
- Distributor changes where the reseller maintains the customer relationship
- Authorization-type changes where the partner retains the same PGA
What does this mean for partners?
In practical terms, partners are not penalized simply for changing distributors or making certain business structure changes. Instead, the COCP policy remains focused on situations where customer ownership changes between partners.
For Pax8 partners, this additional clarification provides greater flexibility while maintaining eligibility for applicable incentive opportunities.
Being a part of the Pax8 Voyager Alliance means that Pax8 partners may be able to take advantage of additional benefits and support for change of channel events. Check with your Pax8 rep to see what additional incentives are available to you.
New Growth Margins on CSP Economics
Beginning in October 2026, Microsoft will introduce a brand-new Growth Margins program. This new earning mechanism is designed to reward partners repeatedly for key growth motions, including new-to-offer sales, customer expansion, and increased adoption of strategic Microsoft solutions.
While Microsoft is still releasing additional details, with more expected August 1, Growth Margins further reinforces the direction of the FY27 program. Partners should start preparing now by identifying customers with expansion potential, prioritizing strategic workloads, and aligning sales motions to net-new adoption and customer growth.
What This Means for Pax8 Partners
Across the FY27 changes, partners should lead with workloads most closely aligned to Microsoft’s growth priorities. Microsoft 365 E5 and Copilot, Business Central, and tier 2/3 Azure workloads like Fabric, Foundry, and Sentinel carry strategic accelerators or higher growth rates, making them important focus areas for FY27 planning. Please refer to the product addendum to learn more about what products are included in each Strategic Growth Accelerator.
From enhanced Growth Accelerators to new Growth Margins, FY27 reinforces a simple theme. Microsoft is investing in partners who create growth through net-new customers, new seats, upsell, strategic workload adoption, and Azure expansion. The more you help customers adopt, expand, and innovate, the greater your opportunity will be to earn.
Check out these additional Microsoft resources to learn more about all the FY27 changes. And to keep up with all things Microsoft, make sure to join our Microsoft Monthly Updates.
