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Revenue recognition for selling partners in multi-party private offers

Iron Contributor

Has anyone encountered this question/objection from a selling partner:  Will the selling partner be able to recognize the full value of the deal if we transact via MPO?

 

They are concerned they will only be able to recognize their margin on the deal where Microsoft pays the two partners their respective cuts instead of the traditional model where the customer pays the selling partner then the selling partner pays the ISV.

 

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1 Reply
best response confirmed by Daniel_Langille (Iron Contributor)
Solution

@Daniel_Langille 

This is a concern for some selling partners and rightfully so in many cases.  This is a scenario where the customer may drive the decision.  If the ISV’s offer is Azure Benefit Eligible and the customer wants to use MACC Decrement the selling partner may not have a choice as the ISV and Customer can complete the transaction via ISV-Customer private offer.   If the customer is not using MACC Decrement, the customer may still force the transaction to flow through marketplace for a variety of reasons (modern procurement, better deal from the ISV, etc.) or the ISV may force the issue (deal velocity, lower COGS, trying to achieve higher co-sell status, aligning to Microsoft account team, etc).   For some deals, especially larger deals, losing out on top line revenue can be a significant issue for the selling partner but there is value in moving to marketplace (deal velocity, lower COGS, account team relationship, etc.) and many selling partners have already shifted their models, especially seller compensation, to account for marketplace transactions.  Personally, where I have seen the most pain for the selling partner is when they realize they are only getting margin at the very end of the sales cycle.  Getting this all ironed out early in deal construction, will alleviate issues for all parties and give the ISV and customer time to drive to the right outcome.

1 best response

Accepted Solutions
best response confirmed by Daniel_Langille (Iron Contributor)
Solution

@Daniel_Langille 

This is a concern for some selling partners and rightfully so in many cases.  This is a scenario where the customer may drive the decision.  If the ISV’s offer is Azure Benefit Eligible and the customer wants to use MACC Decrement the selling partner may not have a choice as the ISV and Customer can complete the transaction via ISV-Customer private offer.   If the customer is not using MACC Decrement, the customer may still force the transaction to flow through marketplace for a variety of reasons (modern procurement, better deal from the ISV, etc.) or the ISV may force the issue (deal velocity, lower COGS, trying to achieve higher co-sell status, aligning to Microsoft account team, etc).   For some deals, especially larger deals, losing out on top line revenue can be a significant issue for the selling partner but there is value in moving to marketplace (deal velocity, lower COGS, account team relationship, etc.) and many selling partners have already shifted their models, especially seller compensation, to account for marketplace transactions.  Personally, where I have seen the most pain for the selling partner is when they realize they are only getting margin at the very end of the sales cycle.  Getting this all ironed out early in deal construction, will alleviate issues for all parties and give the ISV and customer time to drive to the right outcome.

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