In an effort to help Windows Store developers attract new customers, Microsoft launched new Windows Store and Xbox gift cards allowing consumers to buy apps without the need of a credit card, or fund a child’s account without worrying about overspending. Let’s face it, gift cards are a convenient way to give someone a chance to easily purchase an app or a game via the Store for Windows 10, Windows 10 Mobile, or Xbox.
Microsoft has sent out an email to app developers informing them of a new fee that will take effect starting March 2016, affecting the revenue made by app developers if a gift card is used for the app or in-app purchase. This fee is called “Commerce Expansion Adjustment” and will be at a rate of 2.24% on top of the normal Windows Store fee.
But why? According to Microsoft, this is because gift cards have a higher cost with packaging and channel partner revenue sharing.
While gift cards make it easier for consumers to purchase app or in-app content, Microsoft just made a tad bit less attractive for app developers who rely on revenue made via app purchases. Here’s the email that was sent out to all app developers:
Adding new revenue opportunities for you is a key priority for Windows Store. To attract more store customers, we recently launched new Windows Store and Xbox gift cards. Gift cards are now available at thousands of new retail locations and online stores in 41 markets. Windows and Xbox gift cards work interchangeably and can be used on both Windows and Xbox stores. Sales associates will promote gift cards to customers who want to give gifts, buy apps without a credit card, or fund a child’s account without the worry of overspending.
With the recent expansion and because gift cards have higher costs due to packaging costs and revenue sharing with channel partners, a Commerce Expansion Adjustment will be added to app and in-app product purchases made with gift cards. 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 App Proceeds payable for apps or in-app product transactions using gift cards.
The Commerce Expansion Adjustment for gift cards will take effect in specified markets in March 2016 at a rate of 2.24%. Details about how the Commerce Expansion Adjustment is calculated and deducted from App Proceeds can be found in the App Developer Agreement.
Windows Dev Center allows you to choose which markets you publish your apps and how you price them in each market. In doing so, you may want to consider if the Commerce Expansion Adjustment applies in a specific market and factor that into your market pricing strategy going forward.
The Windows Dev Center Team