FY27 co-sell mechanics

PRACR No Longer Carries Co-Sell. Check the Gap Now.

In FY27 Microsoft made Marketplace the primary path for co-sell at scale and stopped treating partner-reported ACR as a broad co-sell mechanism. Here is what changed, what still counts, and what to do about the gap.

What changed

Marketplace Billed Sales

No grace period

Where to see your number

The MACC connection

What to do now

Most software companies building a Microsoft co-sell motion carry the same mental model of co-sell credit: close deals, self-report the Azure spend through PRACR, let it count. That model held for years. In FY27, which began July 1, 2026, it changed.

Microsoft announced it quietly on July 10, 2026, redirected its old PRACR page to that announcement, and left the operational guidance to a single line: work with your PDM. Partner-Reported Azure Consumed Revenue no longer operates as a broad co-sell mechanism. Marketplace is now the primary path for co-sell at scale. Here is what that means, what still counts, and what a partner without a dedicated PDM can do about it.

What changed

Marketplace is now the primary co-sell path

For most of the program's history, a software company could build co-sell credit by self-reporting Azure Consumed Revenue through PRACR, even for deals that never transacted through Microsoft Marketplace. In FY27, that self-reported path no longer carries co-sell at scale.

Microsoft's own language, from its July 10, 2026 Partner Center announcement, effective FY27: "Co-sell is now Microsoft Marketplace-first... because it supports verified transactions, clearer alignment between partners and Microsoft sellers, and more predictable outcomes." The FAQ on the same page states it flatly: "In FY27, PRACR no longer operates as a broad co-sell mechanism." Marketplace "becomes the primary path for co-sell at scale."

One sign this is a structural change: Microsoft's own PRACR documentation page, the one that used to explain how to self-report, now redirects to this same announcement. The old how-to now points straight at the announcement that changed its role.

FY27

effective July 1, 2026: PRACR no longer operates as a broad co-sell mechanism

Source: Microsoft Partner Center announcement, July 10, 2026. Marketplace sales have also doubled year-over-year for the third straight year (Mira Ayad, GM Global Marketplace, Jul 28, 2026).

Marketplace Billed Sales

MBS is the path Microsoft now prioritizes

Marketplace Billed Sales (MBS) already existed, and Microsoft says co-sell credit for Marketplace transactions "continues to be recognized through" it. It is narrower by design: it counts transactions that actually run through Microsoft Marketplace, verified by the transaction itself rather than a partner's self-reported spreadsheet.

The co-sell requirements page (updated August 18, 2026) still states the threshold plainly: a partner must "generate at least USD100,000 of Azure Consumed Revenue or Marketplace Billed Sales (via Microsoft Marketplace), over the trailing 12-month period." The amount, the window, and both revenue types still stand. Microsoft hasn't published how it attributes non-Marketplace ACR in FY27, so MBS is the evidence a partner controls.

The scope reaches well beyond SaaS. The threshold is measured at the organization level, and five offer types can hold Azure IP Co-Sell Eligible status: Azure Application, Azure Container, Azure Virtual Machine, Dragon Copilot Physician Apps and Agents, and SaaS. If your offer transacts through Marketplace under any of these types, it is in scope.

offer types that can hold Azure IP Co-Sell Eligible status, SaaS among them

Azure Application, Azure Container, Azure Virtual Machine, Dragon Copilot Physician Apps and Agents, SaaS.

What Microsoft Checks	PRACR (Pre-FY27 Co-Sell Path)	Marketplace Billed Sales (Primary Path)
Evidence accepted	Self-reported Azure Consumed Revenue	Verified Marketplace transaction
Who verifies it	Partner attestation	Microsoft, at the transaction level
Path to the $100K threshold	ACR plus broad PRACR self-reporting	ACR or MBS per the requirements page; MBS is the path Microsoft now prioritizes

No grace period

The change applied from the first day of FY27

Microsoft published no grace period for PRACR as a co-sell mechanism, and no proration for co-sell credit a partner was building through self-reported PRACR data as of June 30, 2026. In place of a bridge, its guidance offers one line: "if you have gaps that prevent Marketplace transactions in certain scenarios, work with your Partner Development Manager on the path forward."

That line does real work for partners who have a dedicated PDM. Microsoft itself cites 500,000+ partners, and IMS's read is that most of them have no dedicated PDM, the coverage gap documented in Managed vs. Unmanaged: The Partner Status Microsoft Never Explains and Never Lets You Look Up. A partner already unmanaged before FY27 is also the partner least likely to have someone to call about a co-sell gap.

"Embrace Marketplace or lose relevance."

Alastair Edwards, Chief Analyst, Omdia, on the FY27 shift, reading it as a deliberate signal from Microsoft. An analyst's read rather than Microsoft's own language, and consistent with the strategic direction in Microsoft's announcement. Peter Woest, Cloud Marketplace Partnership Director at distributor Westcon-Comstor, separately noted the move mirrors AWS's own marketplace-first pivot in cloud co-sell. Source: Channel Dive, Jul 13, 2026. Omdia and Channel Dive share a parent company, Informa TechTarget.

Where to see your number

Your MBS number lives in the Revenue dashboard

Microsoft has not published a dedicated MBS hub or a dashboard labeled "Marketplace Billed Sales" by name. The closest real equivalent is the Revenue dashboard under Partner Center Insights and Analytics, which shows the summary of billed sales across all offer purchases and consumption through Microsoft Marketplace, broken down by offer, customer, and geography.

Until Microsoft brands this more explicitly, treat the Revenue dashboard as the de facto MBS tracker. It is the one place a partner can actually see the number the co-sell requirements page is describing, rather than estimating it from memory or an internal CRM.

The closest thing to an MBS number you can actually see

Partner Center > Insights > Analytics > Revenue dashboard. Field definition: "Billed sales for any transaction done through Microsoft Marketplace."

The MACC connection

This also touches MACC eligibility

Marketplace-first reaches past co-sell credit. Microsoft's own co-sell requirements page states directly: "Azure IP co-sell eligible status is a prerequisite for MACC eligibility of an offer." The same eligibility status that Marketplace Billed Sales feeds is also the gate for whether a customer's Microsoft Azure Consumption Commitment (MACC) spend can apply to your offer.

That means a partner with an MBS gap faces two problems: less co-sell credit through the path Microsoft now prioritizes, and a delayed or blocked path to MACC eligibility for the offer itself, which is often the more commercially painful of the two for a buyer-side conversation.

Same transaction, two thresholds

Co-sell credit and MACC eligibility both run through the same Marketplace transaction now

What to do now

What to do about it this quarter

Treat this as a this-quarter problem. A deal outside Marketplace builds no MBS, Microsoft hasn't published how it attributes non-Marketplace ACR in FY27, and nothing suggests a retroactive fix in Q4.

Audit

Pull every deal counted toward your threshold in the last 12 months. Confirm which ones actually transacted through Microsoft Marketplace and which relied on self-reported PRACR data, which no longer carries co-sell at scale.

Check the number

Open the Revenue dashboard under Partner Center Insights. It is the closest thing Microsoft publishes to a real-time MBS tracker, even though it is not branded that way.

Escalate gaps

If a real structural gap prevents Marketplace transactability in certain scenarios, Microsoft's own guidance is to raise it with your PDM. If you do not have one assigned, the contact documented in the July 10, 2026 announcement is IPCosellDesk@microsoft.com.

Don't wait

Treat this as an active gap today. Assume deals outside Marketplace won't be swept into co-sell credit later, and route the next eligible deal through Marketplace.

Not sure if your motion is Marketplace-first or PRACR-shaped?

The IMS Co-Sell Readiness Index scores your Marketplace Transactability directly. Ten minutes tells you whether this gap applies to you.

Measure your readiness

Microsoft asked software companies to do what the program always rewarded, transact through Marketplace, and stopped letting self-reported paperwork carry co-sell at scale.