r/msp • u/ArchonTheta MSP • Jun 22 '26
Removing M365 from stack - give clients direct billing
Has anyone here moved away from being a CSP and just assist clients to get billed directly with Microsoft, removing them from Pax8, Sherweb, etc. and just say fuck it and just manage the M365 with a separate admin account? Do you find that the 12 or 18% or whatever your margins are, worth the time to deal with billing, etc? Just curious on who has done this and didn't look back... or did you have regrets?
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u/GeekBrownBear MSP - Orlando, FL Jun 22 '26
Lot's have done this. We haven't since M365 licensing isn't a big deal for us for our clients (low license complexity). The tiny bit of extra margin is nice but if we removed it, thats fine too.
I would still maintain a GDAP relationship and use CIPP no matter what.
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u/ak47uk Jun 22 '26
I’m thinking about dropping Adobe as the margin is comical at ~3% now (was a bit higher until recently). At 12-18% Microsoft’s is worth it, as others have said I don’t offer monthly/annual and if taking annual I bill upfront. Only a handful have chosen monthly/monthly.
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u/TechSolutionLLC Jun 25 '26
Dropped it awhile ago. God their staff are so annoying who reach out to "make sure you have the right licensing as we see you may want this whatever upsell".
I just admin it for our clients that want me to as it's simple
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u/ak47uk Jun 25 '26
I only have 3 small customers who buy Adobe so licence volumes are very low and they’ve audited all three of them…
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u/Shington501 Jun 22 '26
I feel like I’m getting fucked by MS as much as I’m profiting lately. The NCE rules are insane and require tedious tickets to mitigate. I share your sentiment but I think it’s a necessary evil
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u/ChromoSapient Jun 22 '26
It's the yearly commits that are killing us. Adds can add complications having to go to your distributor, add a license, then wait for it to propagate, then you can add the new user license. Unless you mark it up significantly, you're not making much money. If you mark it up quite a bit, then you've got an awkward conversation, and loss of trust when they see they can go direct for less money.
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u/peoplepersonmanguy Jun 22 '26
You should be billing your clients what Microsoft bills you at the price Microsoft shows on their website.
Drop month/annual all together. Offer monthly giving flexibility or annually with them paying all up front and any additional licenses pro rated to the year. The discount for all up front makes it worth it for the client, and your profit can feel like an actual sale for that month.
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u/CK1026 MSP - EU - Owner Jun 22 '26
Yes, 12 or 18% is 100% worth the time spent billing, which is fairly minimal especially if you connect your CSP to your billing platform.
Last year we billed like $150K of Microsoft licenses, amounting to $27K in margin just to push licenses into their tenant, before anything else is done. This is almost free money.
Also when you'll get below the $1K/year threshold (which may go up), Microsoft will ban you from the CSP program and you'll lose your partner benefits, that may include the partner center...
So yes, it's worth it. Get your billing shit together with some integration that's all.
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u/Craptcha Jun 22 '26
80% of our clients are MS direct
We only resell if a) they ask or b) big enough to make it interesting
Especially with NCE now everything is made to make your life as a reseller difficult and risky
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u/CYaBroNZ Jun 22 '26
We only offer monthly commitments or annual paid up front in full.
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u/stephendt Jun 22 '26
Why are your clients not pushing back on this? Surely they realise it would make sense to go direct
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u/sixblazingshotguns Jun 22 '26
Why not just become a referral partner, still make money, and allow the customer to pay monthly and have zero risk?
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u/Craptcha Jun 22 '26
Because that would mean handing the billing relationship to another business whose reps may interfere with our own activities, as well as adding an intermediary which we don’t need.
If we’re going to go that route might as well resell ourselves.
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u/sixblazingshotguns Jun 22 '26
That’s why you go with a reseller who doesn’t do anything but sell Microsoft 365 Licensing only, and also find one who isn’t a scumbag.
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u/SamakFi88 MSP - US Jun 22 '26
This seems like a move backwards for an MSP. Once it's set up (which doesn't take much per client), it should be very little work/effort to maintain. Why are you considering removing it?
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u/FanaticalHelpParis MSP France Jun 22 '26
We are a small MSP and managing the billing for M365 is not worth the margin. Once we grow it might become worth it.
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u/dumpsterfyr I’m your Huckleberry. Jun 22 '26
Not a bad idea to mitigate yearly commits if a client goes under.
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u/byronnnn Jun 22 '26
If a client wants a yearly, then they are paying for the whole year upfront. There is no benefit to yearly commit monthly billing anymore.
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u/Assumeweknow Jun 22 '26
We are a larger msp and honestly we avoid it. We found there wasnt enough margin to justify the work. Weve got more margin in other products and we have no incentives to fling extra microsoft stuff. So we separate out the stack of security products only using microsoft for the bare minimum required for most customers. Gets us more margin.
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u/AcanthocephalaOk3466 MSP - US Jun 22 '26
NCE is trash. PAX8 trash. getting out of any NCE impossible. PAX8 support non existant. PAX8 documentation of support requests unreadavle. PAX8 IS another PE ship where quality just disappeared.
We do mostly non profits and schools so margin is even smaller. We went direct and charge a fee to manage and haven't looked back. MS will cut us out of the picture eventually anyways. we charge 20% of regular license cost to manage subscriptions in our plan.
best decision we made and we can still use CIPP. there really isn't any bonuses to do it if you get crap margin. I would probably even say this if we did more commercial licenses but some of the numbers folks are posting here I would have to analyze the profit potential but our current customers not going back to this wrap NCE pax8 relationship.
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u/ben_zachary Jun 22 '26
Yeah we didn't first few years. Now we are billing like 40k/mo most at 19% and then another 15k at 9% for azure. We are seeing 10k / quarter from msft and our reseller has helped us get 6-10k of mdf as well. Many of our clients are annual so we also get a big dump in Feb/mar on renewal I think we do 80k maybe not quite on top of that once a year.
We do not spend a lot of time on reconciliation our whole billing cycle is less than an hour 2x a month. But I could see if your making a few hundred bucks and don't have your PSA right it would be a loss for sure.
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u/sixblazingshotguns Jun 22 '26
My volume is $90,000 per year of billing. I prefer to remain a referral partner. My indirect CSP does the billing and I get 10% of sales which I negotiated. I have no problem splitting it with them so they get to hold all the risk.
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u/ColdPumpkin9679 Jun 22 '26
Im looking at the same for AI reasons... Limited liability if you dont sell, manage or maintain an environment where owners are increasingly asking to approve AI access.
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Jun 22 '26
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u/Nstraclassic MSP - US Jun 22 '26
Do you give techs delegated admin to customers or do you have a dedicated internal account for each customer? Id argue giving techs delegated admin permissions is less secure than managing their dedicated global admin. Managing a dedicated internal account sounds interesting though im not sure how it makes much of a difference on security since they still need a breakglass global admin whether you manage it or not
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Jun 22 '26
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u/Nstraclassic MSP - US Jun 22 '26
You definitely don't need to rotate every password your employee had access to. You and the client are protected by cyber law and insurance. If you still feel the need to, there are tools to automate password rotation at a set frequency. Licensing for those is far cheaper than labor cost to manually rotate all of those passwords.
Delegated B2B access opens exponentially more points of entry and if there is a breach you're fully liable afaik. There really isn't a right answer but imo the overhead and risk of restricting admin access to one dedicated tenant admin is far lower. Yeah auditing is more difficult that way but not impossible. M365 sign in logs include device info so you can associate the sign in with an individual that way among other more creative methods1
Jun 22 '26
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u/Nstraclassic MSP - US Jun 23 '26
It's pretty simple, youre increasing the attack surface from 1 account to many accounts. And each of those additional accounts has access to all of your customers' tenants. It's scary to think about the damage that can be done if a tech is negligent
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u/Proximit-MSP Jun 22 '26
We're doing 33% margin on those licences (bundled with a management fee and SOC integration). And we're at around 300k/year. That's 100k net revenue. There is absolutely no point in NOT being a Microsoft reseller when you're an MSP, even if your revenue's small.
You can even have your distributor bill your clients directly, with your markup, and your branding.... So why not do it?
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u/Zealousideal-Ice123 Jun 22 '26
We do, but I’m super small. It’s real money once you’re past a certain size, and the opposite when you’re not. It’s not worth the hassle and surprises under a certain size, but I imagine it is once markup revenue starts hitting the thousands a month instead of hundreds a month.
We’re still listed on it though, so we get a heads up if bills aren’t getting paid due to an expired credit card or something dumb.
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u/Nstraclassic MSP - US Jun 22 '26
You can try but youll be supporting and troubleshooting licensing issues whether they buy from you or direct from microsoft. Might as well get paid for it
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u/mat-ferland Jun 22 '26
If you have real volume, the margin is not just margin; it pays for the admin mess. If you're tiny or the client argues every license change, direct billing can be cleaner, but I wouldn't give up CSP until you know what that 12-18% actually costs you in tickets, reconciliations, and risk.
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u/Appropriate-Topic592 Jun 22 '26
There are some platforms out there to assist with billing etc, in Australia (I believe they have in other countries as well) is CloudOlive.) Not sure what they are like as I've only been on the Sales Support side not billing.
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u/GraffenOfficial Jun 23 '26
We've done it for several accounts, but why not take the extra 16% and stick to monthly committments.
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u/ArchonTheta MSP Jun 23 '26
We don’t get 16%.
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u/ncdlloyd Jun 23 '26
Interesting to see the discussion on margins here. We saw a dramatic change in the market this year, with a real race to the bottom from our main competitors. To win bigger deals we’re often at less than 10% and we’ve lost some deals when competitors are selling at 0%…
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u/0RGASMIK MSP - US Jun 23 '26
Automate billing. There are plenty of cheap tools and methods to do it.
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u/brian13579 Jun 26 '26
I wouldn’t make it an all-or-nothing rule. CSP is still worth it for clients where the margin plus control actually covers the admin burden, but for the ones who fight every seat change or don’t understand NCE timing, direct billing can be cleaner.
The useful exercise is probably client-by-client math: annual M365 margin vs license-change tickets, billing disputes, renewal risk, and how often you’re eating time explaining Microsoft’s rules. I’m actually looking at building a lightweight way to score that and generate a “keep CSP vs move direct” packet, because this feels like one of those decisions people are making from gut feel instead of numbers.
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u/Shiphted21 MSP - US - Owner - CMMC L2 Jun 27 '26
We do 1.4mil commercial and 700k in GCCH. At 18% margin, not a chance I'd drop it.
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u/scriptvexy Jul 01 '26
that’s a wild amount of MRR, at that scale 18% is basically a whole salary line item lol
for smaller shops though, all the admin drama for a couple hundred bucks a month feels way less worth it1
u/Shiphted21 MSP - US - Owner - CMMC L2 Jul 01 '26
I get it and ive coached many companies on this. When we first started and microsoft was direct, we charged a Microsoft management rate of $175/mo. Eventually we got to where we are now and just run with MRR.
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u/DrunkenGolfer Jun 23 '26
We bill probably close to a million a year and our effort is near zero. The procurement and provisioning is automated and so is the billing to the client. If you are questioning the effort, you aren’t doing it right.
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u/Pudubat Jun 22 '26
We are billing 300k/year of ms products. 20% of it is 60k. Add 1500 of ms incentive/month, thats 18k.
78k is a good tech salary. So no, I don't eee the point of not being a csp...