Microsoft Azure Marketplace and Why it Matters to ISVs

The Microsoft Azure Marketplace is a digital store where independent software vendors list, sell, and co-sell products and services. ISVs can list, co-sell, and become transactable. In turn, marketplace buyers can try, buy, and deploy thousands of cutting-edge apps and products, right from their main cloud provider. 

Becoming transactable on the Azure Marketplace means that Microsoft manages the payment for an ISV’s software license on behalf of the ISV. Transact offers are billed directly to Microsoft, which means the buyer must pay with their credit card or through the Microsoft Azure Consumption Commitment (MACC) program, where Azure customers can get discounts.

When Azure customers buy cloud services and participate in MACC, they sign a contract to spend a set amount of money over a specific time period, usually 1 year. At the moment, 1 USD = 1 Azure dollar. Azure commitments operate like a pre-loaded gift card. In the customer’s eyes, the money is already spent. Now they just need to find a worthwhile solution. 

All charges appear on a customer’s Azure bill, which makes selling on the marketplace more reliable than going at it alone. After all, customers rarely default on their cloud bills, since that’s where much of their business is hosted. 

How to become transactable: 8 steps

1. 1. Create a Partner Center Account. This is your home base for listing and transaction management.
   2. Undergo the Verification process. Prove that you meet the minimal legal, financial, and operational requirements to become a transactable partner.
   3. Meet the technical requirements. You must meet specific requirements set by Azure to ensure your tools are compatible with the platform so you offer a seamless UX. Requirements include meeting performance standards, security measures, compatibility checks.
   4. Setting up a landing page. After all the technical requirements are met, then you need to create a landing page or solution. Think of it like an online storefront in a mall of solutions – you need to stand out from the crowd.
   5. Set up billing. Azure’s billing solution is an asset for ISVs and other vendors, but setting it up can be tricky. Integrating billing data on your server with Azure’s system isn’t straightforward. You will need to be strategic when configuring your webhooks and API, as sellers are limited to 30 billing metrics. If you’re stuck on how to customize Azure’s billing system, Invisory can help you build a pricing plan that gives you and your customers the most flexibility. 
   6. Go live. As soon as you have all the pieces in place, you can click “Go live” on the “Offer overview” tab to publish your software offer. Following this, your listing will go through a certification process, which can take a few days to complete.
   7. Align and scale. Becoming transactable is only the beginning. As soon as your listing is live, monitor marketplace metrics and gather customer feedback to refine your offerings. Keep your listing current with the latest product details and pricing to build trust. You will want to keep up-to-date on changes in Azure, as well as engage with marketplaces representatives to shape your medium-term  and long-term strategy.
   8. Explore other hyperscaler marketplaces. After you’re live on Azure, consider listing your app on another marketplace to further boost your reach. The Amazon Web Services (AWS) cloud marketplace is a good option for ISVs.

Learn more about becoming transactable in our “The Future is Transactable” eBook.

In addition to becoming transactable, ISVs can become co-sell ready. This means that Microsoft sellers will sell a solution on behalf of an ISV. 

First, you will need to meet co-sell ready status, which requires you to create a business profile in the Partner Center, publish an offer on the marketplace, and provide additional documentation, including a one-page and a pitch deck. 

After successfully achieving co-sell-ready status, you have the opportunity to become IP co-sell eligible. This requires meeting specific revenue targets (at least $100K of Azure Consumed Revenue over a 12-month period), technical requirements, and becoming transtactable. 

Learn more about the difference between co-sell ready and IP co-sell ready on our blog.

As of the beginning of 2024, over 41,000 products and services are available on Azure Marketplace, per Statista.

While Microsoft AppSource focuses on business and industry-specific solutions, Azure offers a number of applications designed for developers and IT professionals. You will be able to curate which apps appear on your marketplace based on the categories and industry verticals you specified.

Enabling Azure Marketplace is relatively straight forward. According to Microsoft, you will need to complete the following steps:

• Sign in to the Azure Portal.
• Navigate to Cost Management + Billing.
• In the left menu, select Billing scopes and then select a billing account scope.
• In the left menu, select Policies.
• Under Azure Marketplace, set the policy to On

The Azure Marketplace is home to a wide range of solutions across a number of categories, including: 

• Artificial intelligence (AI) and machine learning
• Blockchain
• Data analytics
• Cyber security 
• Containers
• Internet of Things
• Developer tools
• Databases
• Identity and access management
• Internet of things (IoT)
• Migration
• Mixed and virtual reality
• Networking
• SaaS (software as a service)

Benefits of listing, selling, and becoming transactable include:

• Trust, since customers have faith in the Microsoft brand
• Partner opportunities, including access to Microsoft’s support and resource 
• Increased customer base
• Security and compliance tools
• Flexibility
• Scalability
• New revenue channels 
• Customization, including the ability to send private offers 
• Streamlined and simplified payments 
• No need to worry about international taxes or currency conversions, international banking, cross-border taxes, or tariffs 
• Integration with popular Microsoft products, such as Office 365 and Teams
• Opportunity to participate in ISV programs for innovation 
• Reliable revenue
• No need to go chase after late payments or missed payments, since Azure manages all of the payments for you
• Bypass delays that are common in enterprise deals 
• Streamline the legal review and contract process

Read more about the advantages of being transactable on our blog.

Listing on Azure comes with a number of challenges, such as: 

• Lack of resources, especially for small ISVs and startups 
• No cloud alliance or partnership team
• Complexity – lots of room for error 
• Not too much familiarity with the ecosystem (our helpful guide to Azure marketplace acronyms can help!)
• Not enough technical resources to build an API that allows your app to communicate directly with Azure 
• Metering – figuring out how to configure and price your solution can be challenging 

Once ISVs are listed, other challenges pop up:

• Not meeting revenue targets to get the attention of a PDM, or Partner Development Manager 
• Meeting the technical and compliance requirements to become transactable 
• Standing out in the sea of solutions
• Developing a GTM strategy specific to Azure

If you’re listing on Azure, you will have a number of approaches to pricing your application or solution: 

• Free
• Free trials
• Pay as you go (metering)
• Private offers, where ISVs create an offer with negotiated price, duration, and terms for a specific customer

There are a number of benefits to becoming transactable on the Azure marketplace.

Extended market reach

• Massive global audience 
• Can be found by internal cloud sales teams who search their own marketplace to solve technology gaps for clients
• Spanning a number of industries 

Simplified purchasing for customers and billings

• Direct purchases through the marketplace
• Customers don't need to leave the platform 
• Taking advantage of customers spending down their cloud commit 

“Ride along” in the onboarding process 

• Streamline the  procurement and onboarding process
• Skip vendor onboarding
• Use templates for existing vendor and legal agreements 

Opportunity to become IP co-sell ready

• Unlock new benefits from Microsoft, including eligibility to participate in Microsoft Cloud Partner Programs.