Microsoft’s Cloud Solution Provider (CSP) program and New Commerce Experience (NCE) play different but closely connected roles in how partners sell and manage Microsoft cloud subscriptions. CSP defines the partner sales and customer-management model, while NCE sets the commercial rules for eligible subscriptions, including commitment terms, billing, cancellations, license changes, and renewals.
For MSPs and resellers, that distinction matters because a customer’s agreement with the partner is separate from the partner’s commitment to Microsoft or its distributor. Poorly aligned contracts, renewal processes, or payment terms can therefore leave partners responsible for subscription costs even when a customer’s needs change or payments stop.
This guide explains how Microsoft CSP and NCE work together, compares common NCE subscription and billing options, and outlines the cancellation, renewal, and license management rules that partners need to understand to reduce financial risk and protect margins.
- Microsoft CSP vs. NCE: What’s the difference?
- Compare Microsoft NCE subscription and billing options
- How NCE cancellations and license changes work
- NCE cancellations, license reductions, and subscription changes
- NCE renewal checklist for CSP partners
- How MSPs can manage NCE risk and improve margins
- Bottom line: NCE puts more responsibility on CSP partners
- Frequently asked questions
Microsoft CSP vs. NCE: What’s the difference?
What is the Microsoft Cloud Solution Provider program?
Microsoft’s Cloud Solution Provider (CSP) program allows partners to sell Microsoft cloud products and services directly to customers while managing the customer relationship.
Partners can use the Microsoft Partner Center to manage subscriptions, licenses, billing, and other customer-related tasks. CSP supports both direct-bill partners that purchase from Microsoft and sell directly to customers, and an indirect model where distributors purchase from Microsoft and work with indirect resellers to serve customers.
What is the New Commerce Experience?
The New Commerce Experience (NCE) is the commercial framework Microsoft uses for eligible license-based subscriptions, defining how subscription terms, billing frequency, cancellations, and renewals work.
The length of a subscription commitment and its billing frequency are separate considerations, with longer commitments generally providing less flexibility.
A key distinction for partners is that their commitment to Microsoft or their distributor is separate from the commercial agreement they maintain with the customer. This means partners need to understand the Microsoft commitment they are taking on and make sure their customer agreements account for it.
CSP versus NCE: What is the difference?
| CSP | NCE | |
| What it is | Partner sales model | Commercial/subscription framework |
| Primary role | How partners sell/manage Microsoft products | How eligible subscriptions are structured |
| Who it involves | Microsoft, providers/resellers, customers | Partners and customers managing subscriptions |
| What it affects | Partner/customer relationship and transactions | Terms, billing, changes, cancellations and renewals |
CSP and NCE aren’t interchangeable. CSP describes Microsoft’s partner ecosystem and selling model, while NCE describes the commercial rules for eligible subscriptions sold through that ecosystem.
Compare Microsoft NCE subscription and billing options
Microsoft NCE separates the length of a subscription commitment from how often the partner is billed. A subscription can have a monthly, annual, or, for eligible offers, three-year term, while the billing frequency can vary depending on the product and available billing plan.
Monthly commitment with monthly billing
A monthly commitment allows customers to adjust their licensing needs more frequently, making it useful for organizations with changing headcounts or less predictable requirements.
It can provide greater flexibility than longer-term commitments, although pricing varies by product and offer.
Annual commitment with monthly billing
An annual commitment locks the subscription into a full-year term, while billing can still occur monthly. This spreads the subscription charges across the year without changing the length of the commitment.
The partner or distributor can remain responsible for charges through the applicable term even if the customer stops paying or using the licenses, making customer contracts and payment terms particularly important.
Annual commitment with annual billing
With annual billing, the subscription charges are billed upfront for the annual term rather than spread across monthly payments. Partners can separately determine how they bill their customers, since Microsoft does not bill the end customer directly.
As with other NCE subscriptions, cancellation and refund rights are subject to Microsoft’s applicable NCE rules.
Multi-year subscriptions
Microsoft offers three-year terms for eligible products and SKUs. Longer commitments can provide greater stability for customers and partners, but they also reduce flexibility if licensing needs change during the term.
Partners should review the available billing, pricing, and renewal options for the specific product before recommending a three-year commitment.
How NCE cancellations and license changes work
For CSP partners, billing flows from Microsoft to direct-bill partners or distributors, whereas indirect resellers purchase through their distributor and bill their customers separately.
The subscription’s commitment term and billing frequency are separate considerations, with available combinations varying by product and offer. Microsoft does not bill the end customer directly, so the partner is responsible for setting up and processing customer billing.
How subscription charges are calculated
Microsoft calculates charges based on the subscriptions and licenses associated with the customer. Adding licenses during a subscription term can result in prorated charges, while reconciliation data provides partners with detailed information on charges and credits to verify Microsoft’s billing and create customer invoices.
Taxes, credits, adjustments, and currency differences can also affect the final amounts shown on invoices. Distributor fees, where applicable, depend on the partner’s arrangement with the distributor.
When customer payments become a partner risk
Partners also need to account for customer payment risk. Microsoft states that CSP partners with payment obligations remain responsible for outstanding amounts when a customer cannot or refuses to pay. For indirect resellers, the specific financial obligation is governed through their relationship with their distributor.
For this reason, partners should ensure that customer payment terms account for their upstream commitments and that they regularly reconcile Microsoft or distributor charges with customer invoices.
NCE cancellations, license reductions, and subscription changes
NCE gives CSP partners some flexibility to change subscriptions, but cancellation and license-reduction rules are more restrictive than simply changing quantities whenever a customer requests it.
NCE cancellation window
For NCE license-based subscriptions, Microsoft allows cancellations within seven calendar days of purchase or renewal. Cancellations made within the first 24 hours receive a full refund, while those made after 24 hours but within 7 days receive a prorated refund.
After seven days, the subscription generally cannot be canceled for a refund, and the partner remains responsible for the full term even if the customer stops using the licenses.
The cancellation window opens again when the subscription renews into a new term. However, subscriptions created through a partial upgrade inherit the cancellation window of the original subscription. Upgrades themselves are not subject to the standard cancellation window.
Adding and reducing licenses
Partners can increase license quantities at any time, with added licenses aligned to the subscription’s existing end date.
Reductions are more restricted. Partners can reduce license quantities only within 7 days of license addition, including licenses added at purchase, renewal, or during the term. After that window, reductions generally must wait until the next cancellation window at renewal.
Partners should also obtain clear customer authorization before changing license quantities, particularly when a reduction could affect the customer’s Microsoft commitment or the partner’s billing.
Upgrades and transitions
NCE supports eligible upgrades from lower-tier to higher-tier SKUs. Partners can perform some upgrades immediately or schedule them for the end of the term, with both full and partial upgrades supported. Availability depends on the specific source and destination SKUs.
| Change | NCE treatment |
| Add licenses midterm | Yes. License quantities can be increased during the term. |
| Reduce licenses midterm | Limited. Generally only within seven days of the licenses being added. |
| Cancel a subscription | Limited. Generally eligible for a refund within seven days of purchase or renewal. |
| Upgrade a product | Sometimes. Available upgrade paths depend on the source and destination SKUs. |
| Change the next-term quantity | Yes, where eligible. License increases or reductions can be scheduled for renewal. |
| Change the billing frequency | Sometimes. Eligibility depends on the subscription’s term, billing plan, and offer. |
| Manage end-of-term renewal | Yes. Eligible subscriptions can be set to renew, cancel at expiration, or transition to an Extended Service Term. |
NCE renewal checklist for CSP partners
Active NCE subscriptions are set to renew by default at the end of their commitment term. Partners can schedule eligible changes for renewal, including license quantity increases or reductions, SKU upgrades, and changes to the next term or billing frequency.
If a subscription renews without scheduled changes, the pricing for the new term may differ from that of the previous term.
For subscriptions eligible for Microsoft’s Extended Service Terms (EST), partners can choose to renew, cancel at expiration, or move the subscription to a paid extended service term.
Partners should therefore review the available end-of-term options in Partner Center rather than assuming that turning off auto-renewal will always result in the same outcome.
A recommended partner renewal workflow includes:
- 60–90 days before renewal: Review license usage, current pricing, and the customer’s requirements for the next term.
- 30 days before renewal: Confirm the customer’s renewal decision and obtain authorization for any planned changes.
- Before renewal: Enter any scheduled quantity, SKU, term, or billing changes and verify that they are configured correctly.
- After renewal: Confirm that the subscription renewed as expected and reconcile the new term against the customer’s agreement.
This is a recommended operational workflow, not a Microsoft requirement.
How MSPs can manage NCE risk and improve margins
License resale margin is only one part of CSP profitability. Partners also need to account for Microsoft incentives and rebates, distributor costs, financing and payment-processing fees, support labor, collections risk, unused licenses, reconciliation work, currency exposure, and the cost of acquiring and managing customers.
Partners can create additional margin by attaching services around their customers’ Microsoft environments, including:
- Managed IT services: Microsoft 365 administration and help-desk support.
- Security services: Identity and access management, security and compliance, and backup and recovery.
- AI services: Copilot readiness and AI governance.
- Cloud services: Azure management and cloud cost optimization.
- Training and adoption: Employee training and support to help customers use Microsoft products effectively.
READ MORE: We created a guide for MSPs who want to create AI governance services to serve their clients across Microsoft Copilot and other AI solutions.
Partner Earned Credit (PEC) should not be treated as a universal CSP license margin. It applies to eligible pay-as-you-go Azure plan consumption when partners meet Microsoft’s current eligibility, access, and management requirements.
Bottom line: NCE puts more responsibility on CSP partners
Under NCE, managing customer commitments, billing, and renewals becomes especially important. Cancellation and license-reduction limits can leave partners responsible for costs even when a customer’s requirements change or the customer stops paying.
Clear customer agreements and a consistent renewal process can help reduce that financial risk.
Managing NCE effectively can also give MSPs a stronger foundation for building higher-value managed services around their customers’ Microsoft environments.
Frequently asked questions
Can an NCE subscription be canceled at any time?
No. New commerce license-based subscriptions can generally be canceled and refunded within 7 calendar days of purchase or renewal. Cancellations within the first 24 hours receive a full refund, while cancellations after 24 hours but within seven days receive a prorated refund.
After that window closes, the subscription generally cannot be canceled for a refund during the current term. Eligible subscriptions can instead be configured to cancel at expiration, and if a subscription renews, a new seven-day cancellation window opens.
What is the difference between Microsoft CSP and NCE?
Microsoft CSP and NCE serve different purposes. Cloud Solution Provider (CSP) is Microsoft’s partner sales and customer management model, enabling partners to sell Microsoft cloud products and services while managing customer subscriptions, licensing, and billing.
New Commerce Experience (NCE) is the commercial framework that determines how eligible subscriptions sold through CSP are structured, including their commitment terms, billing options, cancellations, license changes, and renewals. In short, CSP defines how partners sell and manage Microsoft products, while NCE defines the commercial rules for eligible subscriptions.
What is the difference between an NCE commitment term and billing frequency?
An NCE commitment term determines how long the customer and partner are committed to a subscription, such as 1 month, 1 year, or, for eligible offers, 3 years. Billing frequency determines how often charges for that subscription are billed.
For example, an annual NCE commitment can be billed monthly, spreading charges over the year without changing the one-year commitment. Partners should consider these separately, as monthly billing does not necessarily imply a month-to-month commitment.
Can CSP partners reduce Microsoft licenses during an NCE term?
Only in limited circumstances. License quantities can generally be reduced within seven days of when the licenses were added, whether at initial purchase, renewal, or during the term. After that window closes, reductions generally must wait until the next cancellation window at renewal.
What happens if a CSP customer stops paying for an NCE subscription?
The partner can still be responsible for the subscription costs. Microsoft states that partners remain responsible for outstanding amounts when a customer cannot or refuses to pay, making customer payment terms particularly important for longer commitments.
Do NCE subscriptions automatically renew?
Yes. Active NCE subscriptions renew by default, but partners can manage end-of-term settings in the Partner Center. For eligible subscriptions, Microsoft now supports renewal, cancellation at expiration, or transition to a paid Extended Service Term, while partners can also schedule eligible subscription changes for renewal.