Microsoft sets lowest price for paid apps at $1.49 for Windows 8 Store

Microsoft sets lowest price for paid apps at $1.49 for Windows 8 Store

Summary: The base price is higher than the 99 cents iOS and Android store customers are used to, but seven-day trial periods will be an option for paid apps.

TOPICS: Windows, Microsoft


Valve may not like it, but the Windows 8 Store is coming, and more details have emerged about pricing policies from Microsoft. The most notable: the lowest-priced paid apps will start at $1.49 instead of the 99 cents that consumers may be used to from shopping for phone or tablet apps in iOS and Android stores.

Prices can rise in 50-cent increments all the way up to $999.99. Developers can choose to release free apps, and support them with in-app purchases. Unlike other app stores, the Windows 8 will allow seven-day trial periods for users to test paid apps before purchasing them. According to an MSDN blog post, apps using trial periods that are sold in the Windows Phone store have earned as much as five times as much as apps that don't.

Microsoft is also providing incentives for successful apps. As with other app stores, the company will take a 30-percent cut of sales (including in-app purchases), but if an app earns more than $25,000, Microsoft reduces that percentage to 20 percent. Apps can also include advertising, which is always an option if developers want to offer free apps.

The company is taking some heat for bucking the app-pricing trend and having developers charge more than the standard 99 cents, but it has some good reasons for doing so -- though they aren't necessarily for the benefit of consumers. Microsoft needs to convince developers to support the Windows 8 platform, and given its experience with the Windows Phone store, it has to deviate from the norm a bit. That's because a recent Vision Mobile survey cited by ReadWriteWeb finds that the typical Windows Phone app earns its developer less than half what an Android app makes in a month -- and just a third of what an average iOS app earns.

A higher base price instantly provides developers more revenue, and the cut in Microsoft's take after the $25,000 sales threshold gives them incentive to create successful -- and therefore even more lucrative -- apps. The big question, though, is whether users will balk at the higher base prices having been conditioned to buy 99-cent apps on their mobile devices.

Considering most software for PCs has always cost far more than a couple of bucks (freeware excluded), the extra half dollar might not make a big difference to consumers used to dropping $30 for a game or utility for their desktop or laptop.  Does it bother you that the base price for a paid app in the Windows 8 Store will be $1.49 instead of 99 cents? Let us know why or why not in the Talkback section below.

Topics: Windows, Microsoft

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  • You are an idiot

    I cannot understand why ZDNET commentators are not in unison in decrying the 20-30% WINDOWS platform tax.
    Have their brains turned to mush ... or do they enjoy being taxed FURTHER.
    I suspect the former!
    • Let me put it another way ...

      ... you have noted, without dissent, a 30% increase in the cost of goods by the fastest growing service on the planet.
      Why don't you recommend to your Government that they increase all tax by 30%?
      That would save a lot of work (but not money).
      I'm serious ... why would a sane individual even contemplate accepting such a greedy measure?
      Please reply on the basis that I have now challenged your intellect and sanity ... instead of the usual ZDNET tactic of deleting a post or avoiding answering the question like a politician.
      • Not a correct comparison/analogy

        The microsoft store will only be on windows 8, and will only have payment options for metro apps. These apps have never existed until now, so I don't know how this can be a 20-30% increase.

        Desktop applications featured in the store will just link to the developer's website; where you can purchase as normal. Also there is still the option to buy software the way you normally do today: brink-n-mortar, digital download, bittorrent :-), etc.

        Bottom line: I have no idea what you're talking about.
        • No idea

          "Bottom line: I have no idea what you're talking about."
          So I see.

          The Apple store is only for ... Apple.
          The MSFT store is only for METRO ... which will soon be all of WINDOWS consumer OS (Windows 9?) if MSFT has its way.
          And AMZN is only for Prime customers.
          You don't see a pattern and the lock in? I do. Four silos.

          " brink-n-mortar"
          You mean bricks and mortar ... which will disappear in a generation for most digital goods.
          Which is unlawful for the software we are talking about.
          "digital download"
          Which is the vendor-specific STORE from whichever of MSFT, APPLE, AMZN you select.

          " there is still the option to buy software the way you normally do today"
          Same with ADOBE products ... for today.
          But what do you think these companies will do in the future?
          The 'old fashioned' outright purchase will be withdrawn and costs for software downloaded to tablets of used on cloud facilities will be ...
          ... taxed at 30% or according to the vendors cloud pricing structure.
          Over which you will have no control.

          You have absolutely no idea of global corporations aspirations, despite their past transgressions, which is why you will be fleeced again.
          • Still not correct

            You are a few minutes form "the end is nigh!" Kidding.

            I believe I understand your concern, however you seem to be lacking an understanding of how markets and distribution works. I don't mean that as an insult. It's not like most people deal with that in their daily lives. I don't regularly deal in that are, but I do have a base understanding from some business courses I've had.

            dheady, who commented below, articulates this pretty well. Without regurgitating his post: the basic idea is that digital distribution through centralized channels (and removing physical distribution lines), along with better visibility and increased access to consumers probably negates the "access fee" that Microsoft is charging publishers. That coupled with competition, competing markets, and software-as-a-service models will probably keep the consumer price impact to a minimum.

            Your assumption and concerns, while valid, are based on the incorrect premise that market prices are static, and not effected by other outside influences. That said, we are all moving toward the inevitable with regard to platforms and software development. We'll just have to see how it all shakes out.

            (hope I made a little sense. I'm not really a "markets" person)
      • I have no idea what you're talking about

        What do you mean by 20-30% tax?
        What is the end-of-the-day impact to Win8 users?
        Are you inferring that users are stupid for paying 50 cents more for minimally-priced apps?
        If that's a deal-breaker for most users, enough to not buy a Win8 device, then those users have got much bigger financial problems.
        milo ducillo
    • Main difference

      Apple makes sure to have 30% margins pretty much everything they sell or any services (such as iTunes) they provide. They make sure to have that with hardware, too.

      Something like the actual XBox 360 is often sold at a slight loss and made up through accessories, games, etc.

      For comparison, AppleTV's bill of materials is roughly $50-$65 (depending on which gen you get) and sells for $99. I realize this is just one example, but please find me an example where Apple sells anything for a loss.
    • You Never Ran a Business

      It not a tax. Only the government has the authority to tax and taxes are not voluntary unlike Microsoft's 30% fee. One can simple still outside Windows app store.

      Noting the exposure on Windows app store, the cost maybe worth it. The fee is the price of doing business and a person is wise should factor int the cost of making the app into the final price. If I sell only a few application $1.49 may be too low of a price.

      You guys should gain some experience with the costs of having your software sold through distribution. Distributors take 40% to 60% of the sale price. Plus you have to spend time and money to train their staff, to do some integration with their system, to meet their minimum advertising budget (decided on a product by product basis), and to agree to their returns policy. 20 or 30% to be listed in an easy to find location that indicates some level of approval (like all applications are tested by a third party) is a great deal for a small company. A company like Valve can afford to do a lot of marketing, enough to drive demand, and can keep 100% of the gross if sold at their site.
      There are now over 1 billion people using Office. A fraction of them will use the Windows store.
      I think Microsoft is getting the companies in their ecosystem to up their game. For example at Costco yesterdya I saw several laptops from different manufacturers with the Microsoft Signature label. These are not being sold at the Microsoft store, but the store is the place where Signature started. FYI the Signature label means there is no crapware on the machine.
  • Tax, no.

    johnfenjackson is apparently confused. That being clear my 2 cents on the 30% that online stores charge the producer of the products is quite reasonable and in fact generous by any other standard of distribution. If you develop an application that, say modifies photographs digitally and wish to sell this application you have to firstly pay programmers, yes even if it's yourself, secondly produce the medium with which to distribute (this includes online distribution as you need a shopping cart website), finally if you sell retail, say at WalMart, the wholesaler and then retailer take up to 50% all by themselves.
    If on the other hand you distribute through Apple's app store, Google Play, or Microsoft's app store the only up front expense you have is programming. The rest of that supply chain is included in that 30% distribution fee that the respective app stores charge. This is why developers are flocking to said app stores. Tax? I think not.
    To give another glaring example of how sweet a deal an app store can be is writing a book. As an author, especially a first time author, I can expect to receive a 5% or so royalty for each paper book sold. After all, producing traditional bound books is an expensive proposition. Distributing is also cost intensive. ePublishing to an app store like iBooks and getting a 70% royalty is a no brainer. Again, Tax? No.
    • Obsolete thinking and distribution

      What you have outlined is the previous millennium's method of doing business with physical goods.

      You have failed to realise that cheap computing power (PC's, communications infrastructure and Internet protocols) render your model obsolete.

      Just as canals were relegated to a by-water (by-water - get it?) with the development of railways ... so the obsolete distribution methods for physical goods SHOULD be relegated to history for the distribution of digital goods.

      You are also completely blind to the intentions of incumbent global corporates ... who wish to perpetuate the obsolete but highly profitable old model ... in preference to a supremely efficient possible new model. Some companies are simply middlemen and would disappear altogether in an impartial digital economy.

      You are also blind to the fact that having paid for you PC and broadband connection you have established a global distribution mechanism on top of which all transactions SHOULD have infinitesimal additional charge.

      Until you see these possibilities we cannot debate the issue. I did however like your proposed distribution cost of 2 cents. That's more like it!
      • Ever hear of Capitalism?

        If the distribution models you propose for digital products really are superior, the market will push them to the top because buyers will eventually gravitate to companies that use them. That's a huge hypothetical, however. Portnoy's reporting, on the other hand, deals with innovations to existing distribution models, then asks if we think those innovations will fly. I fail to see how that is "clueless," though it certainly strikes me that your ignorant rants fit that description nicely. It seems to me the bottom line is that you don't want to pay developers what they think their software is worth, regardless of the platform. That's your issue, not the issue of the evolving distribution channel.
        Mister Bleau
      • physical goods

        We've been shipping software electronically for 25 years. That has been happening for business apps at least that long, even back when 32K baud rates were king. The part you miss in talking about obsolete distribution systems is that the distys provide pre-sales support to the dealers that buy from them. The resellers ask the distributor for the major accounting products to help them make a sale by including other products that integrate with the accounting system. Back when our main application integrated with Computer Associates accounting the CA distribution arm resold our product and things went very well. No way that I could profitably establish contact with every accounting reseller in the US and Canada to sell an industry specific add-on.
  • Perception

    Itwill make a big difference.
    Between Apple, amazon and Google, the $0.99 has become the expected norm.

    Now MS wants the new norm to be a 51% increase?
    Wonder how long that lasts?
    • We really really really need edit functionality ........

      A $0.99 app is an impulse buy - hence the term "cents". Once you start saying "dollar" it moves from an impulse to a thought.

      It is hard enough for devs to catch and hold the fickle publics interest and removing the 99 cents benefit will make it even tougher.

      Bad move.
      • 7 day trial offsets that

        On an iPad I have to buy the app in order to try it. So the 99 cents is more important since it has to be an impulse buy. If I can try the app for 7 days and I still want it then I have no problem paying more for it.
      • agreed

        completely agree.

        That's fine. One more reason to detract from Windows 8's appeal. Does it need any more??
      • Agreed. Microsoft failed marketing 101

        People would rather just push the button, pay the 99 cents, have the full featured app and be done with it and not screw around with 7 day trials.
        • No trials?

          The good news is that you can probably just click the purchase now button and get the full featured app without even goofing around with the trial.

          The bonus is that you will have 7 days to change your mind if the app sucks.

          This could really drive app quality up and in turn customer satisfaction up. No need to read reviews filled with trolls or astroturfing to help/harm the rating. No more need to email for a refund or try to test drive something in 15 minutes... if you can download the datafiles in that time.

          7 day refund is brilliant. $1.49 might not be so great though.
        • Speak for yourself

          I'm interested in the metrics you found that show that's what people would rather do.
          Trialware is vastly successful. The good thing: it's free.
          Another good thing: If you don't like it, you delete it, and it still didn't cost you anything.
          Another good thing: If you do like it, 50 cents won't get in the way of your purchase. If it does, then your life must be in miserable financial shape.

          The only negative thing about a trial is you don't get to fleece the system. At some point it's put up or shut up. Sarcastically using this as a negative point. It will be obviously negative to users who feel they are entitled to free apps without returning something back into the system.
          milo ducillo