Microsoft today is giving a more detailed glimpse of how it will try to compete with Salesforce.com in the market for Web-based customer relationship management software. For starters, Microsoft will bring its new Dynamics Live CRM to market at prices noticeably below Salesforce's rates.

In addition, Microsoft will seek to address a potential sore spot among its industry partners by paying them an annual slice of the subscription revenue they help bring in for the program.

At its Worldwide Partner Conference in Denver this morning, Microsoft announced plans for a subscription rate of $44 per user each month for the professional version of the new Microsoft Dynamics Live CRM, and $59 for the enterprise version.

Salesforce.com lists prices of $65 for the professional version of its Web-based customer relationship management service, and $125 for the enterprise version. List prices in the online CRM market are commonly in the ballpark of $70 to $100 per user each month, said Liz Herbert, a Forrester Research analyst.

[Update: Salesforce.com says it's not concerned. See follow-up post.]

Businesses use CRM programs to handle sales, service and other customer interactions. The new "Live" CRM option, to be offered by Microsoft as an online service, is part of its broader effort to expand beyond traditional software licensing into subscription- and advertising-based offerings.

List prices can be deceiving, because customers can often get discounts, Herbert said. But Microsoft's entry into the market should still have an impact.

"This will force other vendors to get more aggressive in their pricing, because in general the trend that we've been seeing is prices going up," she said.

It's far from the first time the company has employed the tactic. In one recent example, Microsoft released its Windows Live OneCare PC service at subscription rates well below those charged by competing services.

Microsoft already offers its own customer relationship management software, known as Dynamics CRM, but up until this point, customers have needed to install it on their own computer servers or work through Microsoft's partners if they wanted it hosted on off-site servers.

In offering CRM from its own servers, the company risks stepping on the toes of industry partners. At the conference today, the company announced a plan to give partners a 10 percent recurring cut of annual revenue from the Live CRM customer accounts they bring in as "partner of record." The rate will be 15 percent for 2008, in what Microsoft is calling a "special incentive" period.

"We will definitely, at some point, allow customers to directly sign up" through Microsoft, said Brad Wilson, general manager for Microsoft Dynamics CRM. "However, I do feel that the vast majority would benefit from having a partner involved who has done this for dozens or hundreds of customers."

The company says it will start offering the Dynamics Live CRM professional version, at no charge, during an early access period starting this quarter.

The Live CRM service will only be available through Microsoft partners during the early period. Microsoft expects to start charging for the program in the first half of next year, but in 2008 the professional version will be available at a promotional price of $39 per user per month, then the $44 level the next year.

The enterprise version won't be available through the early access program. Microsoft says it will offer it starting next year for the full charge of $59 per user per month. The enterprise version has the added capability of storing and working with data when not connected online.

Both versions will work through the Microsoft Outlook program and Web browsers.