Margin Model

NCE/Modern Azure substitutes Back End Margin (BEM) for Front End Margin (FEM). As a result:

• Price Files will show that FEM = 0% with Microsoft Cost = Customer MSRP.

• Providers, indirect resellers and customers will all purchase the Microsoft service at the customer MSRP.

• On a per subscription basis, customers will designate whether they feel the entities in their relationship, as defined by the PIL used for the subscription, have "added value".

  • If this is the case, then the selling entities in the relationship will make no money on this subscription, although they retain business overhead and direct costs for the Scope of Support Obligation.

  • If this is not the case, then this election will appear in-arrears on the Microsoft Reconciliation Report, and Microsoft will make an up-to-15% Back End Margin available.

    • The BEM appears as a credit to the provider, reducing the current/future Account Payable. There will be no refunds.

    • When a subscription is provisioned, it will initially have the BEM eligibility enabled.

    • The customer may update/change their election every calendar day of the invoice month.

    • The Reconciliation File will show the status of the Customer election at the conclusion of the calendar day for each day of the Invoice Month.

    • Microsoft will credit the BEM for the metered services for each individual day that the customer election is set.

    Providers and indirect resellers are therefore encouraged to offer "value-added services" to customers in order to retain the customer election to grant the Back End Margin.