FY27 co-sell mechanics

PRACR Is Retired. If Your Co-Sell Credit Depended On It, You Have a Gap Now.

As of July 1, 2026, Microsoft counts co-sell revenue through Marketplace Billed Sales, not self-reported ACR. 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 ISVs building a Microsoft co-sell motion carry the same mental model of how they hit the $100,000 IP Co-Sell Eligible threshold: close deals, self-report the Azure spend, let it count. That model was accurate for years. It stopped being accurate on July 1, 2026.

Microsoft did not announce this loudly. It updated one page, retired another, 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 Billed Sales does. Here is what that actually means, and what a partner without a dedicated PDM is supposed to do about it.

What changed

The self-reporting era is over

For most of the program's history, an ISV could hit the $100,000 trailing-12-month threshold for Azure IP Co-Sell Eligible status by self-reporting Azure Consumed Revenue through PRACR, even for deals that never transacted through Azure Marketplace. That path is gone for FY27.

Microsoft's own language, from its July 2026 Partner Center announcement: "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."

The tell that this is a real structural change, not a minor policy note: Microsoft's own PRACR documentation page, the one that used to explain how to self-report, now 301-redirects to this same announcement. The old how-to guide does not exist to update anymore. It was retired outright.

Jul 1

2026: the date PRACR stopped counting as a broad co-sell mechanism

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

The replacement mechanic

Marketplace Billed Sales counts instead

Marketplace Billed Sales (MBS) is the automated replacement, and 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.

Microsoft's current co-sell requirements page 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 dollar amount and the 12-month window did not change. Only the accepted evidence did.

This is not a SaaS-only rule. MBS counting applies across all five offer types tied to 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 where Marketplace Billed Sales counts toward eligibility, not just SaaS

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

What Microsoft Checks	PRACR (Retired)	Marketplace Billed Sales (Current)
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	Primarily Marketplace Billed Sales

No bridge, no proration

This is not a gentle transition

There is no published grace period for this change, and no proration for revenue a partner was already counting toward the threshold through self-reported PRACR data as of June 30, 2026. Microsoft's own guidance does not mention a bridge. It 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. It does very little for the large majority of Microsoft's 500,000+ partners who, by industry estimate, do not, the same coverage gap IMS has already documented in Managed vs. Unmanaged: The Partner Status Microsoft Never Explains and Never Lets You Look Up. A partner already unmanaged before July 1 is now also the partner least likely to have someone to call about a threshold gap that just opened under them.

"Embrace Marketplace or lose relevance."

Alastair Edwards, Chief Analyst, Omdia, on the July 1 shift, framing it as a deliberate signal from Microsoft, not a routine policy update. Independent industry read, not Microsoft's own language, but consistent with what Microsoft's own announcement says about the strategic direction. 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.

Where to check

There is no page literally called "MBS"

Microsoft has not published a dedicated MBS transition hub, and there is no 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 second consequence

This also touches MACC eligibility

Marketplace-first is not only a co-sell credit question. 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 now feeds is also the gate for whether a customer's Azure Consumption Commitment spend can apply to your offer.

That means a partner with an MBS gap is not looking at one problem. They are looking at two: reduced co-sell credit toward the $100K threshold, 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

Action, not commentary

What to do about it this quarter

This is not a year-end reconciliation problem. A deal that does not transact through Marketplace is not counting toward eligibility today, and there is no evidence Microsoft intends to fix that retroactively 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 that no longer applies.

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 operational contact for this specific change is IPCosellDesk@microsoft.com.

Don't wait

Treat this as an active gap, not a future one. Deals that don't transact through Marketplace are not accumulating credit in the background, waiting to be swept in later.

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 did not ask ISVs to do anything harder. It asked them to do the same thing, transact through Marketplace, and stopped accepting the paperwork that used to substitute for it.