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Understanding Microsoft NCE Commitments & Terms

In March of 2022, important changes were made to Microsoft's billing module for Commercial cloud subscriptions. NCE (New Commerce Experience) was introduced as a seat-based subscription initiative, aligned with price changes for many Microsoft 365 and Office 365 products.

Recapping the changes that NCE created:

  • The addition of a monthly and annual subscription. Clients can choose a monthly or annual subscription to suit their needs.
  • The monthly subscription is 20% more expensive than the annual subscription but gives the customer more flexibility when it comes to increasing, reducing, and cancelling subscriptions or licenses.
  • Once an annual subscription has been activated, it can only be cancelled or reduced within 7 days of activation. After that, no cancellation is available. You will have to wait until the anniversary.
  • Upgrades or quantity increases in subscriptions are still possible even after the 7 day deadline, but downgrades in subscriptions or quantities can only happen at the end of the subscription term (i.e. 1 month or 12 months). Contact us for eligible subscription upgrade and downgrade paths.
  • Clients can mix subscription terms to balance subscription flexibility and cost-savings.
  • Clients will not be able to cancel subscriptions or change CSP transaction partners during the agreed to term.


With many Clear Concepts customers reaching their first NCE 'annual anniversary' or 'renewal', we would like to provide additional understanding and address some common scenarios to consider:

Renewal Scenario 1 - All Subscriptions Are Annual

ABC Company employs 20 staff, all using Microsoft 365 Business Standard. These licenses were purchased on an annual term, and the anniversary is soon. ABC is billed monthly by Clear Concepts.

ABC Company has adjusted 5 positions to seasonal, meaning their headcount will fluctuate in the coming year. What options are available to ABC Company?

  1. Commit to 15 annual term subscriptions. Modify the remaining 5 subscriptions to monthly term subscriptions. The monthly term subscriptions can be reduced/cancelled at any time, based on season headcount.
  2. Keep all 20 subscriptions on annual term, however, 5 will be unassigned/unused and still be billed.

*Re-terming existing annual subscriptions to monthly is only possible at anniversary.

Renewal Scenario 2 - All Subscriptions Are Monthly

ABC Company employees 20 staff, all using Microsoft 365 Business Standard. These licenses were purchased on a monthly term. ABC is billed monthly by Clear Concepts.

ABC has had several employees come and go over the year. Their headcount is now 15, but they are still paying for 20 monthly licenses. What options are available to ABC Company?

  1. Commit to 15 monthly subscriptions, cancelling the 5 unneeded subscriptions at any time.
  2. Re-term at any time to 15 annual subscriptions if this headcount will remain stable or increase. This option will save approximately 20% on licensing costs. New subscriptions can be added on either monthly or annual terms to account for headcount growth.

Renewal Scenario 3 - Mix of Annual & Monthly Subscriptions

ABC Company decided in March 2022 to carry a mix of annual (15) and monthly (5) subscriptions for 20 users with Microsoft 365 Business standard. ABC is billed monthly by Clear Concepts.

The first annual term anniversary is approaching, what options are available to ABC Company?

  1. Renew as-is. Keep the same mix of 15 annual and 5 monthly subscriptions. Billing will continue as-is.
  2. Re-term any of the 5 monthly subscriptions to annual to save approximately 20% of those license costs. This can be done at any time, not exclusive to any anniversary.
  3. Re-term any of the 15 annual subscriptions to monthly to gain more flexibility should  headcount be expected to decrease or fluctuate frequently in the coming 12 months. This action can only be taken at the anniversary of the 15 annual subscriptions.


How can I tell which employees have an annual or monthly termed subscription/license?

There is no link between the subscription/license term and the user. All subscriptions are pooled, regardless of their term. Microsoft considers Licenses and Users to be two unique entities.

Users are assigned the services and entitlements of a license or subscription. The services and entitlements (features) are exactly the same for a product (ex. Microsoft 365 Business Standard) regardless of the term.

What happens to a subscription/license when a user is removed?

The license is returned to the pool of available licenses.

  • Annual subscriptions cannot be cancelled until their anniversary. Clear Concepts will review your annual licensing ahead of the anniversary.
  • Monthly subscriptions can be cancelled at any time. Notify Clear Concepts to complete these licensing changes for you, at any time.

How do we upgrade from Microsoft 365 Business Basic to Microsoft 365 Business Standard if we have annual subscription terms or a mix of annual and monthly subscriptions?

Upgrades (to plans with greater features/entitlements, according to Microsoft) can be made at any time, regardless of term or anniversary. Subscription anniversary dates will remain the same, and Clear Concepts will bill the prorated subscription price. Contact us for eligible subscription upgrade paths.

We are not using all of the features of our current Microsoft 365 plan, how do we downgrade?

First, consider our Modern Workplace Program as a companion service, designed to aid your organization realize the biggest return on investment in Microsoft 365 software. Our Adoption Specialists can help your team enable and improve usage of Microsoft 365 services, applications, and collaborative features.

Otherwise, should you wish to downgrade:

  • Monthly subscriptions can be downgraded at any time. The price differential will be prorated.
  • Annual subscriptions can only be downgraded without penalty at the anniversary.


Still have questions? Contact your Account Manager or the NCE experts at Clear Concepts.