Microsoft Dynamics ERP On-Premise License Incentives to Shrink with New Discount Structure

A growth incentive for Microsoft Dynamics ERP partners has ended in fiscal year 2016, and that will mean a cut in license margins for the best ERP partners in 2016 and beyond.

The highest performing Dynamics ERP partners will see their on-premise ERP license margin decrease from 60% to 50% over the next year due to the end of an incentive that offered an extra "3 x 5%" or 15% margin discount based on the ability to add new customers and licenses compared to the previous year and previous two years (though there will be exceptions, see Microsoft's statement below) .

In place of the old incentive, Microsoft has increased the base discount for on-premise ERP by 5% for all three tiers of partners to 40%, 45%, and 50%, for tiers A through C, respectively. Revenue thresholds will remain the same.

Microsoft says the new rate reflects the average performance of most partners over the last three years. Steve Espeland, Director, Dynamics Partner Incentives, explains that the change makes incentives simpler and more predictable. He told MSDynamicsWorld.com:

"Partners have been asking for simplified and predictable incentives. We listened and acted. This model is both simple, stable, and does not take money out of the channel. It also benefits the partners by increasing predictability of their business models.

"The specific tiers are based on three year average rates and top partners will receive an exception rate of 55 percent for their SPA license discount. In order to help partners transition, we're providing partners with the higher of the two incentives from now until June 30, 2016."

"These [...