7 ms·
Here's how the new payment structure works: > When Microsoft delivers a customer through other methods (tracked by an OCID), such as when the customer discover
by jawns 8y ago
Here's how the new payment structure works:
> When Microsoft delivers a customer through other methods (tracked by an OCID), such as when the customer discovers the app in a Microsoft Store collection, through Microsoft Store search, or through any other Microsoft-owned properties, then you will receive 85 percent of the revenue from that purchase.
> When there is no CID or OCID attributed to a purchase, in the instance of a web search, you will receive 95 percent revenue.
So this is all about rewarding organic discovery, or paid discovery outside of Microsoft channels.
In other words, by allowing your app to be discovered first through the Microsoft Store search, you're paying Microsoft what amounts to a 10% commission.
And then, regardless of how it was discovered, you're paying 5% to Microsoft just for being on the platform.
It will be interesting to see what effect this has on the ecosystem. On the one hand, it seems like a reasonable shifting of costs. If you rely mostly on Microsoft for acquiring new customers, then Microsoft should get a little bit more of a cut, and if you rely mostly on your own marketing methods, then it should get less. But on the other hand, part of the strength of an ecosystem-based business model is that it's a one-stop shop, and one would think that Microsoft would want to incentivize discovery happening within that ecosystem, not to disincentivize it.
- ductionist 8y agoThat sounds about right, although 5% (or 15%) is a pretty good deal IMO for worldwide payment processing, installer and update distribution, DRM, and their built-in tools like crash reporting, push notifications, analytics, affiliation, and attribution.
- valuearb 8y agoIt’s insanely good deal. MSFT has to be losing money on that.
- AlexandrB 8y agoWhat? How? Of the services on offer, only payment processing has significant cost to Microsoft. Things like crash reporting are solved problems whose cost should be approximately equal to the cost of hosting the data.
- ductionist 8y agoI'd add hosting on top of that - like Apple, Google, etc., they don't charge you for distributing your app (which could be hefty, per paid transaction, if you have a low-converting trial or freemium app).
- deleted 8y ago[deleted]
- busterarm 8y agoPayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. Fraud reduction accounts for the majority of that percentage. Patreon has established that they will completely go out of business at 5%. Steam is taking 30% and Epic is taking 12%. Salaries, servers and regulation are expensive. Microsoft offering 5% is a steal.
- SkyPuncher 8y ago> PayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. This is neither unique to PayPal or the actual floor. 2.9% + (roughly) $0.30 is pretty much the standard across all public facing credit card processors like PayPal (and their subsidiary Braintree), Stripe, Amazon Pay, Authorize.net, and more. I have heard rumors Stripe offers rates as low as 1.8% for large volume processors. Adyen charges $0.12 + 0.6% + interchange fee making them extremely lucrative for their customers (including Uber, Netflix, Etsy, Spotify). Given Microsoft's size and expertise, I'd anticipate they are operating close to interchange rates around $0.10 + between 0.8% and 1.6%.
- martinald 8y agoIn Europe Stripe offers 1.4% + 25eurocent for EU cards, with the same 2.9% for non EU cards. Stripe actually charges US customers an extra 1% to process EU cards (3.9% total), plus a hefty forex fee. For a company like MS with a major EU presence the average rate will be skewed lower than what the market looks like.
- no_wizard 8y agoLike all digital goods, the marginal cost of MSFT doing this is zero. I don't think they are losing money on this, in terms of pure margins, its probably quite lucrative (though in absolute revenue, maybe not so much).
- asdfasgasdgasdg 8y agoCredit card processing is not a digital good, per se. Microsoft has to pay Visa and Mastercard their x% + y cents, and has to deal with returns and fraud and whatnot. Which is not to say that they're losing money, but this isn't the true zero-marginal-cost scenario like a Google web search.
- no_wizard 8y agoTruly though in accounting terms I think it falls under fixed negotiated cost and not marginal the fees are known and negotiated as a flat rate and adjusted gross selling prices reflects that so selling more goods does not increase the price of that cost
- renholder 8y ago>...and their built-in tools like crash reporting... I'm assuming you mean if it has Azure Analytics packaged into it? Otherwise, I've never heard of WER (read: Watson) being available external of Microsoft; which could have been (and still could be, plausibly) a huge trove of information (if we're talking purely on a bug trends for various devices/flavours perspective).
- smileybarry 8y agoIf you're registered on their developer portal, you can upload public symbols (exports only) of your builds and receive stacks & problem signatures of any matching WER dump. I work for a small-to-mid-sized infosec company (with no special Microsoft partnership) and we've gotten WER crash reports of our UI component this way.
- stephenhuey 8y agoSo if they are browsing your website, decide they’ll probably purchase it, but then later they open up the Microsoft store and search for it there, you lose money you would’ve had if they’d immediately downloaded it from a link on your website?
- ductionist 8y agoIf they click your link (that includes the `?cid` parameter) while they're on your website, I believe the `cid` value is cookied/stored with their Microsoft Store profile, and will be respected even if they buy later directly from the Store. If they visit your website but don't click the link, then there's no way for the Store to attribute the sale to your website, so you'll probably be charged full freight (15%).
- chipperyman573 8y agoCan you just include an invisible iframe with that link so the cookie gets placed?
- tialaramex 8y agoYup. Same if the customer thinks of buying your product at your own brand store, but then forgets, later they see it in a different store and buy it there. They pay the same RRP, but you see a smaller slice because the store keeps a cut. Is this a problem? Not necessarily, if you're so sure customers would come back to your store then you can just refuse to sell it to other stores except as a retail product (so they couldn't afford to offer the same price as you) It can be a problem if the store owner has some special privileges you don't have. Maybe they're the only one licensed to sell booze in the whole country. Or, take Apple, the only ones able to sell apps that actually work out of the box in an iPhone. So far as I know, Microsoft aren't yet as abusive as Apple here. But I suppose that isn't helped by the fact that Microsoft's store isn't exactly a wild success.
- ehsankia 8y agoHmm, I'm not sure what the case is, but it feels like direct search for an app by name shouldn't count. I'm not sure if there's an easy way though to differentiate a direct search and a general search term, depending on the app name.
- taurath 8y agoSo it’s worth 10% if someone uses the search bar in the store? Or if it’s on a top100 list? Those top100 are probably the apps that are most likely to push back against a 15% cut though.
- KorematsuFred 8y agoThey might have backdoor negotiations on the revshare any ways.
- NicoJuicy 8y agoLive of the momentum, I don't think so. I see a lot of Google ads going to apps and once they are there. Stop the ads. Smart move
- connicpu 8y agoConsidering it's only half of the cut Apple takes 15% isn't very high
- omouse 8y agoIt's obvious from that structure that Microsoft realizes they are part of a larger ecosystem and that they aren't a dominant channel. > if you rely mostly on your own marketing methods, then it should get less That's usually how it is. You rely on your own website and blog for organic results and Google or Facebook or some other channel (billboards, TV, podcasts, etc.) for paid advertising. Microsoft and other app stores don't really fit into this equation, they're only good for partnership deals and SEO is harder to do in an app store. Microsoft is just recognizing the reality for customers and realizing that they can possibly make up for it in volume. If I'm saving 10% from this new fee structure, that's more cash that I can re-invest into advertising in outside channels.
- keerthiko 8y ago> That's usually how it is. That's usually how it should be. But if you collect payments through Apple App Store or Google Play because your apps are available on their platforms, even if customers didn't discover it from the stores but through your own marketing methods, the platforms get the full 30%. There are some ways to circumvent this, but not really. [assumed flow is potential customer sees marketing/advertisement, clicks to website/ad, or goes to app store and searches for your app to download it, pays from within the app]
- lemoncucumber 8y agoThe Mac would be a better comparison than iOS. On the Mac, developers are free to circumvent the Mac App Store entirely and keep 100% of the revenue (minus whatever it costs them to process the payments, distribute the binaries, etc.) And in fact this change specifically excludes Xbox (and, curiously, all games in general), which is the (remaining) Microsoft platform that's closest to iOS in terms of being locked down.
- keerthiko 8y agoMac is not a better comparison because we're talking about the Microsoft Windows Store in particular here, not "all software that can be run on Windows computers." You are still free to circumvent all royalties to Microsoft by not listing your product on their store at all and marketing externally and keep 100% of the revenue, which is similar to the Mac, but the Windows Store is more akin to iTunes or Google Play.
- int_19h 8y agoThe app is going to be in the Store either way tho, it's only a question of how the user ends up there.
- no_wizard 8y agoWell, Microsoft is at an impasse here: I work for a large Enterprise, and we of course use Windows almost exclusively, and perhaps this is not their target, yet I will say this: None of our apps are going through that store. They're all coming from direct from vendor purchases, of which Microsoft gets Zero. under this model, it encourages (perhaps) some of the smaller/medium Enterprise vendors to give up having to deal with a payment system at all, in exchange for simplified distribution (if I read this correctly) and no more payment handling, and in exchange MS gets a 5% cut. This to me makes complete sense. Most of the Windows ecosystem for software is mostly out side of Microsoft's hands. Indeed, it is the #1 strength of the platform beside its ubiquity. I actually think this is a brilliant insight on the side of Microsoft, by inverting this model they get a non-zero slice of a a pie they previously did not have. It also encourages more vendors to uptake the distribution model via their Store, which I think is ultimately what they want more than a cut of sales in aggregate. Say nothing of the home user, who beyond MS Office perhaps never transacts at all with Microsoft when they buy other software.