In a nutshell: Microsoft cut the fixed rebate in July and pays growth margin from October, so a stable customer base now earns less than it did last year. The obvious response is to chase new logos in the hardest acquisition market MSPs have reported. The pipeline that is easier to reach is already yours: every Microsoft 365 tenant you administer has accumulated exposure, orphaned workspaces and unused licenses that the customer cannot see and has never been quoted for. One scan of that tenant gives you two things at once, a Copilot readiness assessment and a list of work you can quote, which is also the only renewal conversation this year that does not start with a price increase.
A few months ago I moved into a new role at BindTuning as Head of Partnerships. I had worked with partners before through sales, so I thought I understood the brief reasonably well.
The role put me in conversations where partners talk about the shape of their business, and I started mapping what I heard against additional research. The picture that came back was heavier than I expected.
Margin on the license is going down while the price on that license goes up. New customers are harder to win than at any point these partners can remember, and the ones who do arrive sign smaller contracts. Microsoft is pointing the whole channel at Copilot, and the partners who sold Copilot are watching customers barely use it.
All of that arriving together, inside the same twelve months, is a lot to carry. Let us examine each challenge in more detail.
Growth Margins Arrive on October 1
Microsoft repriced partner earnings around growth this year, and it arrived in three steps.
- The fixed rebate is gone. Since 1 July, indirect resellers lost the baseline 3.75% earned on Microsoft 365 CSP transactions regardless of what happened inside the book (Pax8).
- Growth Margin starts on 1 October, paid only on premium products: Copilot, E5, E7, Defender Suite, Purview Suite and Windows 365 Enterprise.
- It pays on three motions only. A new customer on the offer, seat expansion, or product adoption.
- Base margin drops 5% on a set of legacy standalone products from the same date (Cloudmore).
A customer you hold steady, renew on time and never upset now earns you less than they did last year. To earn more, you have to show that something moved.
The July Price Increase Lands on You, Not on Microsoft
Next, Microsoft raised Microsoft 365 list prices on 1 July 2026, the largest commercial pricing update since 2022, and the steepest increases landed on the plans your smaller customers run.
| Plan | Change |
|---|---|
| Microsoft 365 F1 | +33% |
| Microsoft 365 F3 | +25% |
| Microsoft 365 Business Basic | +16% |
| Office 365 E3 | +13% |
| Microsoft 365 Business Standard | +12% |
| Microsoft 365 E3 | +8% |
| Microsoft 365 Business Premium | No change |
Source: Microsoft 365 pricing and packaging updates, annual commitment, suites with Teams.
Microsoft's justification is that there is more in the box now, mainly extra email storage and time-of-click link protection. You are the one delivering that argument to a customer looking at a bigger invoice. And if we are honest, you will probably struggle to defend it.
Existing customers move to the new price at their next renewal, so this rolls through your base over twelve months, one conversation at a time. If your contract fixes a single per-user price covering the license and everything you do around it, the increase has nowhere to go except your own margin.
Why Is Winning New Customers So Difficult Right Now?
Replacing lost margin with new business is the hardest route available. Acquiring new customers is the top business issue for MSPs at 71%, ranked above cybersecurity, revenue growth and profitability (Kaseya 2026 State of the MSP report, 1,061 respondents).
The blockers underneath that number are structural:
- New clients mostly come from other providers, with 33% of MSPs reporting that new business is primarily competitive takeaway and only 12% seeing first-time outsourcers.
- Deal sizes shrank at the same time, with the share of customers spending more than $25,000 a year falling from 75% to 41%, while 24% of MSPs report clients cutting IT budgets.
- The share of MSPs who say they cannot quickly demonstrate value to a prospect nearly doubled year over year, from 10% to 19%, where buyers want proof they can verify before they sign.
Proof like that is difficult to assemble for a company whose environment you have never seen. But there is proof already sitting in every customer you have. I will explain.
The Upsell Opportunities Sitting in Your Customer Base
Your existing customer relationships hold two things no new vendor relationship supplies or competitor can buy: administrative access to a customer's Microsoft 365 tenant, and knowledge of how that business runs day to day.
Every one of those tenants has been accumulating since the day it was set up. Sharing links that made sense three years ago and were never withdrawn, workspaces whose owner left the company, sites nobody designed, content nobody labeled, licenses still assigned to people who are gone.
None of it reaches you as a ticket, because the customer does not know it is there. Until recently it did not reach you at all, since building that picture for a single customer meant days of exports from admin centers that do not talk to each other, and nobody quotes work they cannot see.
Your New Pipeline Tool: The Integrity Score
The Integrity Score is a diagnostic BindTuning built for Microsoft 365 customers, to answer the question their IT team cannot answer from the admin centers: how healthy this environment is, and what should be fixed first. It connects to a tenant, measures 33 metrics against benchmarks, and returns one number between 0 and 100.
The metrics roll into four categories, weighted by business impact.
| Category | Weight | What it looks at |
|---|---|---|
| Oversharing and access | 35% | Who can reach what, and who decided that |
| Sprawl | 25% | Workspaces created, duplicated and abandoned |
| Ownership | 20% | Whether anyone is responsible, and whether they are still here |
| Adoption | 20% | Whether people can find their way around and want to |
A score above 80 means controls are working and standards are applied consistently. Between 40 and 59 means gaps in ownership, oversharing or sprawl are creating real exposure. Below 40 is poor, and 39 is where a first scan usually lands.
That number says nothing bad about your customer. It simply describes an environment that has been running for years while everyone's attention was somewhere else.
Read from the partner side, the same scan does two different jobs depending on how you work with that account.
- If you supply the license, it gives you evidence at renewal and a number the customer can track year to year.
- If you manage the tenant, it gives you findings sorted by severity, each one pointing to a type of engagement.
Every finding resolves into one of four actions: remediate it now, configure the tenant setting behind it, improve the workspace, or prevent it from recurring.
What a Scan Finds
A scan does not return a list of complaints. It returns findings, and each one already tells you what kind of work it needs, so the quoting is half done before you start.
Three examples from tenants that look like your customers:
SharePoint sites with links open to anyone.
The finding: sites where a link works for whoever holds it, some of them shared deliberately years ago by someone who has since left.
The work: remove or correct the open links, align the tenant sharing settings so it stops recurring, then put controlled provisioning behind it.
What you sell: an immediate risk reduction conversation and a longer governance engagement, out of one finding.
Workspaces with no active owner.
The finding: the clearest evidence of what accumulates when nobody is watching, and the list grows every month.
The work: assign owners, apply classification, then require ownership at the point of creation so the list stops growing.
What you sell: an ownership and lifecycle service that renews every year.
A missing or misconfigured Brand Center.
The finding: every site someone creates looks like a different company, which reads as cosmetic and is not.
The work: fix the current issue, configure Brand Center, build a theme, then make that approved look reusable through templates so the next hundred sites arrive correct.
What you sell: a governed, consistent workspace experience rather than a branding complaint.
The same logic covers the rest of what a scan returns, with missing templates pointing to a provisioning engagement and low adoption to an intranet project. Seeing all of your tenants at once, rather than one customer at a time, is what separates a tool from a revenue motion.
The Copilot Readiness Assessment
Your customers are asking for AI and almost nobody in the channel is being paid for it. Kaseya found that 48% of MSPs name AI and automation as the top client need for 2026, ahead of security at 42% and backup at 36%, while only 13% identify it as a meaningful revenue source.
That gap exists because Copilot struggles in a disorganized tenant, in one of two directions:
- Either the answers come back thin and wrong, because the content underneath is unlabeled, duplicated and unowned
- Or it surfaces something it should never have surfaced to someone who should never have seen it. Nobody did anything wrong in the second case: the permissions had been like that for years and nothing brought them to the surface.
Both outcomes sit in the M365 environment rather than in Copilot, which is why readiness is not a feature anyone switches on. Four things decide it, and they are: permissions, ownership, labeling and adoption. And these are precisely what the scan already measures.
The AI Opener for a Partner Success Project
The partner carries the consequence. A customer who concludes that AI does not work for them does not call Microsoft, they call you, that seat does not renew, and the ones who gave up paste into a free AI tool instead, so the information leaves the company altogether.
But if you run the scan on a customer considering Copilot, you can have a readiness assessment without having to call it one.
One BindTuning partner sold on exactly this footing, leading with the state of the environment rather than with a product. The customer's opening need was not governance, it was that their people needed to use AI without company information leaving the building, and the deal closed in about a month against the six to twelve these normally take.
How to Justify the Price Increase at Renewal
Most renewal conversations happening across your base this year will be an email forwarding a higher number, and what the customer hears is that their bill went up and their provider passed on someone else's decision.
The alternative takes minutes to prepare. You arrive with the increase and with what you found inside their environment: the inactive licenses nobody canceled, the workspaces with no owner, the files shared with the whole company three years ago. Same increase, different meeting, because what the customer hears is that somebody was watching.
Next year that conversation gets easier, since the score gives you a number to show moving, and the engagement that moves it counts as adoption and expansion, two of the three motions Microsoft now pays Growth Margin on.
Start With One Customer You Know Well
Pick a customer whose environment you think you understand, and ask yourself what a scan would come back with. If the honest answer is that you have no idea, that is the opportunity.
If you want to scan a customer tenant and see where they stand today and what your opportunities look like, get in touch.
FAQ
What qualifies for Microsoft Growth Margin?
Growth Margin pays on specific motions rather than on your book as a whole. Microsoft built it around new customers on the offer, seat expansion and product adoption, applied at the transaction level from 1 October 2026 and limited to premium products including Copilot, E5, E7, Defender Suite, Purview Suite and Windows 365 Enterprise. Indirect resellers should confirm with their distributor which components pass through and at what rate.
What does an Integrity Score of 39 mean?
The Integrity Score runs from 0 to 100 across 33 metrics in four weighted categories: oversharing and access at 35%, sprawl at 25%, ownership at 20% and adoption at 20%. A 39 falls in the poor band and is also the typical first scan result, which points to an environment that has drifted without supervision rather than one that was mismanaged. For a partner it is a starting point the customer can verify inside their own tenant.
Does a scan change anything in the customer's tenant?
No. The scan reads the current state of the environment and reports on it, leaving configuration, permissions and content untouched. Remediation is a separate action you and the customer choose after seeing the findings, and every action is logged.
How is this different from cleaning up a tenant once?
A cleanup fixes what exists today, and the environment drifts back as new workspaces are created without owners, structure or lifecycle rules. The scan sorts findings into what to remediate now and what to prevent from recurring, which is what turns a one-off project into a service that renews.
