In October 2026, CSP introduces a new growth margin alongside the existing base margin. Base margin remains the standard rate on business as usual renewals and ongoing subscriptions, while the new growth margin is a higher margin total that distributor and direct-bill partners can earn when they drive qualifying customer growth. (Growth margin already includes base margin; it is not stacked on top). Eligibility is evaluated at the customer’s tenant level and locked in at the time of sale, so partners should validate and structure deals correctly before transacting. The customer experience remains largely unchanged.

This change reflects Microsoft’s prioritization of partner investments to focus on Frontier Transformation. With growth margin, partners can earn more when driving new-to-offer, seat expansion, and adoption for qualifying scenarios across select AI workloads. Note: The CSP price list will not change and customer costs will not be affected by the introduction of growth margin.

What is Growth Margin?

Growth margin is a new economic construct designed to reward CSP distributors and direct bill partners for driving net customer growth across Microsoft 365 strategic workloads rather than relying sole on point-in-time promotional discounts. For select enterprise SKUs, distributor and direct bill partners can earn the higher growth margin on qualifying transactions through one of three growth scenarios: new-to-offer, seat expansion, or strategic SKU mix.

Eligibility

Growth margins are only applicable to direct bill partners and distributors.
Eligibility is assessed at the customer's tenant level, accounting for their entire purchase history across every Microsoft channel and partner, not only with the current CSP partner.
A new subscription is only required when a partner wants a mid-term seat expansion or strategic SKU mix to qualify. New-to-offer and scheduled renewal scenarios can qualify based on eligibility without requiring a new subscription solely for growth margin.

Customer Impact

Growth margin affects the economics between Microsoft and the partner. It does not set, suggest, or limit the final price a partner may charge its customer. Partners remain responsible for independently determining customer pricing.
The official CSP price list remains unchanged and will continue to reflect standard partner pricing with base margin applied. Growth margins will be provided separately and applied only during qualifying transactions.

Partner Benefits

Unlike traditional point-in-time CSP licensing promotions, growth margin is an incentive structure that rewards partners for continued focus on customer growth over time, with partners incentivized for long-term customer expansion and adoption. With this model, partners will benefit from:

More predictable earnings opportunities
Reduced dependency on limited-time promotional offers
Broader upsell and deployment revenue opportunities, including AI readiness and workload expansion

Call to Action

Reviewgrowth margin partner landing resources and FAQ to get full investment and customer eligibility details
Reviewgrowth margin documentation on Microsoft Learn
Begin planning for how growth margin will impact partner revenue and for all Microsoft 365 deals moving forward

FY27 CSP Growth Margins for Select AI Workloads

Microsoft CSP Team