Microsoft slashes its app revenue cut to five percent

Microsoft is aware software on its app store is often not as profitable as those on rivals, but today it’s helping developers out by slashing its own cut of the revenue.

During BUILD last year, Microsoft announced Windows 10 was on 500 million devices. Compared to iOS’ approximately one billion users, or Android’s two billion, it’s clear developers for Microsoft’s platform have far less potential customers.

Microsoft is attempting to make up for this shortfall, and improve the profitability of developing apps for its platform, by slashing the cut it takes from apps sales. The previous rate for non-gaming apps was 30 percent but it’s now being reduced to just five percent.

For comparison, Microsoft’s share of the revenue is now on par with the Chrome Web Store. It’s most impressive when compared to Apple’s App Store and Google’s Play Store, where both marketplaces still take 30 percent.

There are a couple of caveats. First off, it does not apply to games which will remain on the previous revenue share rate. Secondly, Microsoft’s share will increase to 15 percent — still half of its competitors — if a user discovered the app through Microsoft featuring it in their Store, or in a collection.

Microsoft wrote on its developer blog:

“Starting later this year, consumer applications (not including games) sold in Microsoft Store will deliver to developers 95pc of the revenue earned from the purchase of your application or any in-app products in your application, when a customer uses a deep link to get to and purchase your application.

When Microsoft delivers you a customer through any other method, such as in a collection on Microsoft Store or any other owned Microsoft properties, and purchases your application, you will receive 85pc of the revenue earned from the purchase of your application or any in-app products in your application.

The new fee structure is applicable to purchases made on Windows 10 PCs, Windows Mixed Reality, Windows Phone and Surface Hub devices and excludes purchases on Xbox consoles.”  

Microsoft’s new fee structure is a good step towards improving the profitability of developers building apps for its platform. This may be an overdue move which finally helps to generate some traction on the Microsoft Store.

Do you think it was a good move by Microsoft? Let us know in the comments.

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