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Windows Store apps won't get as much revenue from gift card-based purchases in March

Windows Phone, Windows 10, and Windows 10 Mobile app developers will soon see a little less money for the apps and in-app purchases from gift cards. Microsoft sent an email to those developers late on Friday informing them of the new 2.24% "Commerce Expansion Adjustment" that will go into effect in March.

In the email. Microsoft noted that the company recently launched new versions of its Windows Store and Xbox gift cards, both of which can be used to buy apps and in-app purchases in the Windows Store. The email also said those cards are available in 41 markets around the world.

Windows Store app email

Microsoft stated the higher costs of gift cards, due to packaging, along with revenue sharing with partners and the recent market expansion for these cards, are the reasons why it has decided to add this new "Commerce Expansion Adjustment" percentage cut for all gift card-based app purchases. Microsoft says:

"The Commerce Expansion Adjustment is an additional percentage on top of the normal Store Fee (percentage of Net Receipts) that is deducted in calculating the Apps Proceeds payable for apps or in-app product transactions using gift card."

So far, there's no word on how much money app developers typically get from purchases made from gift cards, so it's hard to figure how exactly how much this new "adjustment" will affect their revenues.

Thanks to Wpenvy for the tip!

88 Comments
  • Wtf MS
  • Woke up to this mail, went back to sleep.
  • Woke up to your comment, went back to sleep
  • Oh wow, I didn't know I had that much power.
  • Stop commenting! Some of us need our sleep!
  • Penny wise pound foolish. That is what you are, Microsoft
  • Agreed. It isn't as if the costs really are more to them, as currently they ate paying credit card processor fees that they won't be paying on gift cards, so it should be a wash. It's just an excuse to rip us off more than they already are. I mean, 30% already... There's no way their costs are even close to that.
  • Pretty much every store on the planet has a 30% mark up on pretty much anything. From your local corner shop to companies that sell parts to NASA. It's not about covering costs, it's about making a profit. Especially as they are giving W10 away as a free upgrade, this is where they are going to try and recoup all those costs.
  • Apple takes an even larger cut. Microsoft is just trying to make a profit. People seem to forget that Microsoft is a business before anything else.
  • They can't see the forest for the trees. They know the price of everything but the value of nothing. Yada yada.
  • Woke up to write this, went back to sleep.
  • if this helps selling some more apps it's not a problem...
  • Oh Microsoft !
  • They sure do everything in their power to destroy the platform.
  • why, ms also has to pay for the production of those cards, i'm sure apple does the same, i don't know if google also has giftcards, but if they do they'd do the same thing as well
  • But android and ios have a lot of developers not unlike us who are always begging for apps..
  • Uh neither Apple nor Google do this, from what I understand.
    Microsoft already is taking 30% of revenue. Quite honestly with the state of the store, that percentage can not be justified as it is now. To charge the developers more for Microsoft doing it's job leaves very bad taste in my mouth. It is absolutely absurd, especially given that it is guaranteed money that will be spent in the store without credit card fees, risk of chargeback, etc.
    What's next? They are going to take another piece out for every commercial they run?
  • Apple also charges a 30% revenue on all sales (even In-App-Purchases). And their developer account is a hefty 99$ a year.
  • Pretty much more affordable than Apple's counterparts, since MSFT wants to take payment from devs only a price of a pizza, every year (from what I know, recently).
  • They can.
  • When you have a insignificant markets share and constant are begging for developers you can't afford to act like you are Google or Apple. The people in MS doesn't seem to know how to do business. Let me ask you, how much money can MS make if all devs leave? MS makes so little money from the store as it is, they should just invest in the devs by taking a smaller share, say 15-20% until the store is of a certain size.
    No I am not a dev but I think they should get extra fir sticking around.
  • You do know that the Windows Store is about more then just mobile right? With over 200 million PC's on Windows 10 you are not talking about a small market. Most people buying these cards are buying them for PC (and tablet) use, as the bulk of Windows 10 users is on those devices at the moment. Microsoft makes costs distributing these gift cards and obviously that money needs to come from somewhere. And lets not forget that having a Windows gift card next to a iTunes and a Google Play gift card is good for the visibility of the platform and gift cars are actually good for developers as it removes the credit card obstacle for store purchases, so it's better for developers as it's now possible for more people to buy their apps.
  • Also dont forget that all money on your MS account also works on Xbox.
  • 200 million PCs and how many of them use the app store at all? With websites being just as powerful as a Windows App, there is no reason to use the store. Actually, most websites are far superior to the Windows App. There is no good reason to develop for Windows, and this increase in fees isn't making it any better. Microsoft should drop their cut completely. It certainly wouldn't help and may even motivate some developers to actually make an app instead of a website that is cross platform. Posted via the Windows Central App for Android
  • A great website that functions well on multiple platforms is nice, but websites don't have some advantages that apps offer. I'm not a programmer/developer, but here are advantages of apps I notice: Utilization of hardware features - Apps have a better framework to utilize a device's hardware features like cameras, accelerometers, pressure sensors, biometrics, etc. I believe websites currently have limited capabilities in utilizing hardware features. For people using Windows tablets, detachables and smartphones, apps can better utilize hardware features to provide more functionality and a better experience. OS integration for a more native feel - An app provides seamless use with system notifications, Live Tiles, Cortana voice queries/commands, sharing, inter-app connections, etc. Depending on how well it's designed, it can scale nicely from the smallest to largest screens without unnecessary browser elements in the way. Marketing - Having an app on the Windows Store provides more brand and product visibility, builds goodwill to users of the platform (supposing it works great with decent updates), and makes the product, service or webpage more ubiquitous. Offline access - Currently, apps can provide better offline functionality as opposed to a webpage. There's no reason why an organization can't have both a great website and a great app. Providing excellent choices for users is a plus.
  • MS already takes 30% from devs...
  • My thoughts exactly. As if the broken Store Search and the constant flood of scummy/ spam apps weren't enough, they keep finding new reasons to discourage or scare away (potential) developers.
  • As a developer I am also a bit annoyed about this. This is not wise given the position they are in. Either a dev does nothing to the app pricing and accepts getting paid less with use of cards, or as Microsoft suggests, adjusts up the app price in the affected markets. But that is a broken model. The app price would be higher, passing the cost on to the end user, regardless of the use of cards. You cannot provide only a higher price by detecting the payment with gift cards, which is what is really need, you have to charge everyone. It really requires an extension to the licensing model to target how the payment was made. Another reason for devs to consider jumping platform. On the other hand they are sending out emails to offer help to port old Silverlight and WP8.1 universal apps to the new Uwp platform. At Microsoft often the head doesn't know what the tail is doing.
  • Lol this @ bottom of page ""Rest of World" markets for Windows 8.x
    If your app includes packages targeting Windows 8.x, it's important to be aware that a number of markets are treated as a single "Rest of World" market for customers using the Store on Windows 8.x, even though they are now shown as individual markets in the Windows Dev Center dashboard (as opposed to the earlier Windows Store dashboard, where there was one selectable "Rest of World" market option).
    If you leave the default selection when submitting your app, you don't have to worry about this, and your app will be available to all possible markets. However, if you want to exclude certain markets, keep in mind that excluding even one of these "Rest of World" markets means that your app won't be available in any of the "Rest of World" markets for customers on Windows 8 or Windows 8.1."
    |
    guess at least on 10 developers dont have to use ws if they dont want to but its more convenient
  • This is great for developers.
  • How? Making less money sure isn't a benefit. Posted from my Moto X Pure Edition via the Windows Central App for Android
  • Lol
  • Aren't they increasing the footprint of the markets where the gift cards are available?
  • Guess it is if your only targeting w/mw10 seeing as you could sell apps anywhere if you instruct users on how to unlock the os for those types of apps
  • Where's the official dev center app BTW?!
  • Removed after years without updates....
  • As if a lot of developers care about windows:(
  • But the ones who were thinking that with project islandwood who wanted to port their applications to windows platform won't do so.
  • LOL. I exactly thought the same. Posted via the Windows Central App for Android on my iPhone 6S Plus
  • Windows central app for android on iphone...! Wtf
  • Lol yeah 31% instead of 30% will change their mind. Lucky us developers are not hysterical whining kids (most of the time)
  • No expansions, no more.
  • It seems MS inadvertently wants win 10 PC to go down along with win 10 mobile!
    Instead of paying a billion dollars in donations pay the developers.
  • For the longest time AoE was, in my mind, associated with Microsoft and Windows and, surely, Microsoft hardware. I am slowly learning to not trust Microsoft or believe in what they preach, because more often than not they just like the false preachers run after the money, abandoning those that stood up for them when their name was nothing and their hardware recognition - zip. I know, I know It's nothing personal, it's just business. Unfortunately the fans do not see it that way.
  • For the longest time AoE was, in my mind, associated with Microsoft and Windows and, surely, Microsoft hardware. I am slowly learning to not trust Microsoft or believe in what they preach, because more often than not they, just like the false preachers, run after the money, abandoning those that stood up for them when their name was nothing and their hardware recognition - zip. I know, I know "It's nothing personal, it's just business". Unfortunately the fans do not see it that way.
  • I think this could be a good thing. Suspect most of these cards are bought by Xbox users. They may be more inclined to spend any leftover credit on apps in W10.
  • A funny thing about these cards... Games are normally about 20-50% higher priced in Sweden vs US (tax, market size, sallary etc etc). But, to be able to use an Xbox with Kinect that you bought in Sweden (including directly from Microsoft Sweden) you have to put it to English languague. Fine with most BUT it will also change the region and the force you to buy your games in US digital shops, easiest via Microsoft gift cards... I.e. by locking fegion and language together (which has worked sperately in Windows since 3.0)  Microsoft forces people to cheat with taxes and to trick the developers. Aint this just absurd?
  • I'm sure they haven't thought of this. They have made soo many retarded move the last half decade that you'll never know if intentionally or pure incompetence. In this case they probably being morons as they always think US only.
  • I think that you have to live in a very small bubble to not think about this. I have a feeling that MS has a company policy that no one with an IQ over average or has ever traveled around the world is allowed to make any decisions... Nadella is the only one that does not atleast look like he was born on a farm in the “fly over country” (but he seems busy with iOS//Android
  • When you buy a US gift card it is up to the reseller of that gift card to charge you the necessary taxes and pay the Swedish government. I'm Swedish too and the places I buy US gift cards from include VAT/moms.
    I don't know of any online store which does not follow the laws. They would be heavily fined and probably out of business fast. So, if you know that you are buying gift cards from an online store that does not charge you the necessary taxes, then that is on you, not MS.
  • You missed the point. IF you buy an xbox with kinect in sweden microsoft encourages you to cheat with taxes and to let the developers down  Xbox must be put to US region (not only English language) to get the Kinect to work. You cannot just change language without changing region (which is absurd). What people do to be able to buy digital games after having their region fu..d up by Microsoft is faking a US address and paying by Paypal. There are even people that has been recommended by Microsoft to solve the region problem this way.   Another "funny" thing by Microsoft. IF you buy Xbox, Kinect AND the Microsoft Xbox tuner you cannot use them together (Kinect Requires US region and the tuner Requires Swedish region...). Impressive!
  • Oh, I know what you were saying, I have Kinect myself. But what you said about gift cards is not true. You pay taxes on the gift card. And if you want to fake your address with a paypal account, then that is on you. You can easily purchase games on your phone, in your region setting, without committing tax fraud and they will start downloading on your Xbox. Or temporarily switch region, but it's easier to buy from your Xbox app on the phone. So, no! You are not forced to commit tax fraud. And if you buy gift cards, which was your whole point, then you pay taxes. Do they need to separate region and language? Yes, absolutely! But not for the reasons you state.
  • So your solution is to buy from another device? smooth...
  • This was about gift cards. Your first statement was incorrect, that is all. :)
  • Hej, när folk med Kinect redan tvingats ändra REGION till Amerikansk så kan de inte använda svensk store. Man kan ej heller använda den amerikanska då man ej har ameikansk adress. Resultatet blir att folk gör fejkadresser för MS/Paypal. De kan då handla till Amerikanska priser och skattesatser via tex Amazon vilket knappast är vad vare sig vad Microsoft eller utvecklarna önskar sig ...  Orsaken till detta ÄR Microsofts idioti att låsa språk till region. Du kan läsa om detta på tex Sweclockers/Flashback.
  • Tjenare! Jo, jag vet att man kan handla med paypal och kringgå momsen, men jag refererade till ditt första inlägg. Köper man presentkort från en onlinesida så kommer momsen att läggas på presentkortet. Så att köpa amerikanska presentkort är inte skattefusk. Byter man region, och inte orkar skifta fram och tillbaka när man handlar, och ändå vill använda sitt debitkort i svensk butik, så kan man handla från xbox.com eller Xbox-appen.
  • Less money for apps which results in less development of platform WTF Microsoft.
  • Doing things to "attract" more devs to the platform huh?
  • Microsoft you should sell them to retailers at cheaper price se we can buy them at there normal price without any extra fees , WTH
  • Dat logic.
  • Well done MS. Now you are really pushing away those developers( including me). Posted via the Windows Central App for Android on my iPhone 6S Plus
  • Waiting for the opt-out link
  • Is Microsoft near to bankrupt...? Do they really need this ??
  • Don't be a moron, over 200 mill PC's running win10, nothing is small then. Microsoft always goes up in overall profit. Want to talk about bankrupt, this is not the place.
  • A company that charges the card printing costs to the developers seems a very poor one to me (as a poor, moron developer).
  • Pls read properly...says packaging, distribution etc...cards don't jst pop up in stores do they...nothing wrong in charging developers a small bit...it would be a slight knock on the developers revenue.. But probably a significant one for MS if they don't do this...
    They are a business..can't do stuff for free...
  • People here clearly don't understand business.
  • No, if we understood business we would not have bought MS products, Zune, RT, Kinect, WP, W10M.... All good investments...
  • What are the rates on other platforms?
  • Gift cards are a great thing to finally see! But the should have taken the financial hit, instead of passing it onto developers -_-
  • That's why Microsoft is making more android apps
  • Yeah, that will sure make more devs develop for Windows. Currently, Windows 10 Store offerings are abysmal. EDIT: No wonder: http://betanews.com/2016/01/22/developer-windows-store-is-a-disaster/
  • Thanks grandma! A gift card for the MS app store! Said no one, ever
  • That's surely THE incentive for the devs. Yay! :|
  • Does seem sort of absurd to upcharge/surcharge. *but* if this means actually marketing gift cards, getting them front and center and increasing app purchases then a ~2% fee is nothing to cry about because a "cost per acquisition" on apps/marketing for the developers themselves is usually much higher than that. I can't find any information to see if Apple or Google does this.  But lets be honest.  If you use a premium rewards card, the credit card company is charging retailers a higher % to process that payment than a normal rewards card. You're basically driving up costs to make some things more easier/convenient and someone is paying for it. A $.99 cent app could market itself at $1.29 and probably sell just as well and make more money too.. i don't mind paying for good stuff and i would like the convenience of gift cards - especially if we want this marketplace to expand to kids & family. 
  • What all of the MS appologists and armchair business majors are missing here is that 1) no other company does this (Google and Apple both only take their cut, not additional fees for gift cards) and 2) it is absolutely a petty cash grab. The whole gift card market is driven by businesses. It is NOT a consumer friendly market. The reason businesses eat the cost of cards is because buying one locks that money into an ecosystem. That money is Microsoft's the second the card is purchased - it goes into their coffers and begins earning them interest. They also typically make money that never has to actually return product. Gift cards are a giant scam (but people buy into it because it's more personal than just handing over cash, since you had to take 1/10th of a second to remember that someone likes PF Changs or Home Depot). Companies pay out about 85% on gift cards. That means that they automatically make 15% more on gift card sales than they would if people direclty purchase the same number of products with cash because some people don't use them or they don't use all of the balance. Most states also allow gift cards to expire, meaning money just floats away. Additionally, they don't have to deal with external processing fees, so the 'hit' of running their own processor is offset. Lastly, the printing thing isn't fully true since a large percentage of gift cards are electronic and a drop of ink never touches paper for a growing number. So, we have a company spinning the Lisa Simpson "Temporary Refund Adjustment" line to suck up a few pennies from devs on a market that already tips wildly in their favor. When trying to grow share. It's almost like the new captain can only see one quarter into the future, as this will undoubtedly harden the headlamps of the investors. My only other guess is this is a move to offset losses on Bing Rewards, since many people use those cards to buy apps rather than spend real cash. But that's on MS and shouldn't be passed down to devs.
  • Agreed! I've been saying this. Gift cards are a scam to lock someone into a specific business or businesses. Luckily, expiration fees are no longer a real issue, but gift cards can easily get lost/forgotten, not ever get used up completely, among other things. Better to just give cash, treat them out to a nice meal or drink, or actually find out what they really want. If what you're saying is true about Apple and Google not charging such fees on developers, Microsoft should just eat up the cost too or raise their developer fees. If gift cards already provide Microsoft more advantages with consumer lock-in, no additional processing fees, no chargeback risk, etc., then Microsoft really shouldn't be tacking this fee onto developers. Not if they want to get more developer interest in the platform that is.
  • As a dev myself I highly doubt this will change anything. If people were planning to come to Windows they likely still will. If they weren't, they weren't. This will have little impact in the grand scheme of things.
  • You're not doing your mobile platform any flavors by doing this,And this will probably kill any momentum with developers. Posted via the WPC App for Android!
  • I'm not a developer and even this pisses me off for sooo many reasons. Here in the states, when or if I purchase a gift card, I'm already paying the tax up front... Then getting charged a tax again on each app I buy.... Wtf?
  • I am not sure what paying the sales tax has to do with this article...
  • MS charges Apple premiums and then some while the store is anything but. Strange strategy but Mastermind must know what he is doing.
  • Mastermind. Nevermind. Posted via the Windows Central App for Android
  • Suppose the dev is charging 1$ and has userbase of 100 so developer is getting 70$ as microsoft is charging 30%.. Suppose microsoft is charging 40% then to have the same revenue should be 116.67 users or 117. So the formulae is Un = ((100 - Mo)/(100-Mn))*Uo
    Uo = Old users
    Un = new Users
    Mo = Old Miccrosoft %Charge
    Mn = new Microsoft %charge
    I think now devs should understand what should they do.This calculation assumes app will be of same cost
    The graph can be seen here http://1drv.ms/1PLPPFT
  • Im
  • I'm left wondering if it is possible to port an iTunes gift card to a Microsoft gift card?
  • Windows 10 mobile officially need now
  • And apps also have to be improve in quality i mean all apps... Include games.. some games are lagy ... Only in windows mobile work fine in Android have same hardware