Applying promotions for Microsoft subscriptions

Microsoft NCE promotions reduce the cost that a CSP reseller pays to Microsoft. By leveraging a Microsoft promotions API, promotional pricing applied to eligible customer purchases in Partner Center can also be applied to the same subscription in an AppDirect marketplace. Promotions are automatically applied during purchase flows for Microsoft NCE subscriptions when Enable apply dynamic promotion is enabled.

When a customer purchases new NCE products, performs subscription updates, or renews existing subscriptions, the AppDirect platform calls the Microsoft API to check whether the purchase is eligible for an active promotion. If eligible, promotional pricing is reflected in the purchase UI according to your marketplace passthrough configuration.

Earlier, if a customer's purchase was eligible for an active Microsoft reseller promotion, the subscription would be provisioned in Partner Center with promotional pricing applied, but the AppDirect platform would continue using the marketplace-configured pricing. This resulted in reconciliation discrepancies even though promotions were applied.

If a subscription still has promotional pricing in Partner Center but not on the marketplace, Marketplace Managers can identify and correct the gap using PROMOTION_NOT_ON_MARKETPLACE in the Microsoft Sync Tool.

Eligible promotions are automatically applied in the following purchase flows:

Checkout V1 and V2
Update V1 and V2
Renewal
Opportunities

Passthrough configuration applies consistently across these flows. End customers do not control passthrough; it is a partner-side setting.

Prerequisites

The following settings and conditions must be met for automatically applying promotions:

Use Microsoft NCE product profiles. Promotions are not applied for legacy subscriptions.
Enable PromotionSyncJob on the cluster. PromotionSyncJob runs daily to sync promotions from Microsoft Partner Center.
Enable Enable apply dynamic promotion. Go to Manage > Marketplace > Settings > Billing Functionality. In the Subscriptions section, select Enable for Enable apply dynamic promotion.
To configure promotional discount passthrough, contact your AppDirect technical representative to request feature enablement. Passthrough is available in Early Availability (EA) and is not enabled by default.

Configure promotional discount passthrough

Until configurable passthrough is available, the full Microsoft promotional discount passes through to end-customer pricing. Marketplace Managers can configure passthrough from 0% to 100% so partners can retain part or all of a promotional discount as margin instead of passing it through entirely.

The marketplace default is 100% passthrough. No configuration change is required if you continue passing the full discount to customers.

Marketplace-level passthrough

Go to Manage > Marketplace > Settings > Billing Functionality.
Ensure Enable apply dynamic promotion is enabled.
Set promotional discount passthrough to a value from 0% to 100% (default 100%).

Edition-level passthrough (optional)

Edition-level settings override the marketplace default for that edition only.

Open the product profile via Edit Product and go to the Editions & Pricing tab.
Select the edition with a production pricing plan.
Navigate to Payment Plan Custom Attributes.
Select the Override checkbox Customize promo pass-through for this pricing plan to reveal the passthrough field.
Set the edition passthrough percentage and then Save.

How passthrough is calculated

When a purchase is eligible for promotional pricing, the platform uses the edition override if one exists; otherwise, the marketplace default applies. The platform applies the configured percentage to the Microsoft promotional discount before calculating the customer-facing price. The portion of the Microsoft discount not passed through is retained as partner margin.

For example, if Microsoft applies a 20% promotional discount and passthrough is set to 50%, the customer-facing price reflects a 10% discount and the partner retains the remaining 10% as margin.

Existing partner discounts and markups are preserved and applied on top of the passthrough-adjusted price.

❗ Important (for partners): Review your Microsoft Partner Agreement before changing passthrough. Microsoft promotional discounts count as Customer Discounts under your MPA; Maximum Resale Price obligations are based on the applicable Customer Discount (ERP minus the Microsoft Promotion). If you set passthrough below 100%, you keep part of the promotional discount as margin and are responsible for meeting your MPA passthrough and Maximum Resale Price requirements. Review MPA Channel Terms and consult your legal counsel before changing passthrough. AppDirect does not guarantee your MPA compliance and is not liable for Microsoft audit findings related to how you pass through promotional discounts to customers.

How are promotions applied?

When promotions are applied, partners can determine a customer's eligibility for a promotion during the purchase flow. If eligible, promotional pricing is applied according to the configured passthrough percentage.

Checkout and subscription views show generic promotion messaging rather than a headline discount percentage. At 0% passthrough, promotion messaging is hidden from customers even when the Microsoft promotion applies to the partner cost price.

📝 Note:

To stop applying Microsoft promotions entirely, disable Enable apply dynamic promotion.
To apply promotions but retain margin, configure passthrough below 100% instead of disabling promotions.
If a partner wishes to enable promotional pricing but adjust customer pricing further, adding a markup on top of the passthrough-adjusted price is still supported.

Here are a couple of purchase scenarios where promotional pricing is applied.

Checkout V2

Checkout V1

When a customer selects a product and edition and adds it to cart, promotional pricing is dynamically applied. The price displayed in the cart matches the price shown at checkout.

Transaction limits: If the promotion has restrictions, such as a maximum number of seats, these limits are enforced.
Eligibility checks: Microsoft performs tenant-wide eligibility checks through its API. The API returns a positive or negative response to determine whether the promotion is available for the customer.
Reconciliation: Full Microsoft promotion metadata (such as promo ID and Microsoft cost price) remains on the subscription record regardless of passthrough. The Microsoft Sync Tool compares cost prices and promo metadata; partial passthrough does not create false PROMOTION_NOT_ON_MARKETPLACE discrepancies.

Limitations

If a customer is eligible for a promotion when upgrading a subscription through the Microsoft Upgrade experience, the promotion will not be displayed during the process. This is because the Microsoft Upgrade tab does not include a Cost Summary section. Customers are advised to use the Update tab to complete subscription upgrades when promotions are involved, as this ensures the promotional pricing is visible.

Partners cannot validate a promotion even if the customer has not yet accepted a reseller relationship or linked their Microsoft customer tenant to the partner's company. For accurate quoting, it is advisable to onboard and link the customer before providing final pricing.

Passthrough configuration applies to new transactions only. Existing subscriptions are not retroactively adjusted when passthrough settings change.

FAQs

What happens if I purchase using Delayed Provisioning?
If a delayed provisioning date is selected, the promotion end date is compared with the provisioning date. The promotion will only be applied if the provisioning date falls within the promotion's valid duration.
Why do I see a Promotional Price for a new customer without a Microsoft tenant?
We cache available promotions for offers that meet general eligibility criteria, such as the promotion's duration and transaction limits. While the promotion is displayed when the offer is added to the cart, it is indicative only. Final eligibility is revalidated at checkout once the Microsoft customer tenant is linked to the company.
What is the difference between disabling promotions and setting passthrough to 0%?
Disabling Enable apply dynamic promotion stops Microsoft promotions from applying on the marketplace. Setting passthrough to 0% still applies the Microsoft promotion to the partner cost price and retains the full promotional discount as partner margin, but hides promotion messaging from customers and does not pass the discount through to customer pricing.
Does a subscription keep its passthrough percentage at renewal?
If a subscription was purchased with a specific passthrough percentage and the promotion still applies at renewal, the passthrough percentage is retained. You do not need to reconfigure passthrough for renewing promo subscriptions.

Applying promotions for Microsoft subscriptions

Prerequisites