Which business model is right for your app?

  • Article

I’m David Mowatt, a program manager on the Office Store team. By now, you’ve probably read that we’re offering great opportunities to reach millions of users inside their Office experience. You’ll either have an existing service/app that you think would be valuable to users, or you’ll have been inspired by Elisabeth and Russell on how to write a great app. You’ve hopefully started with the mechanics of building your first apps for Office and SharePoint. Now that you have the idea behind your app, I want to get you thinking about how to get those millions of users to download your app, and in particular I want to tell you how to go about deciding which business model is right for your app?

This post covers the capabilities of the Office Store that give you flexibility to attract customers and build a great business. It considers several questions: Should your app be free? If not, how should you monetize? How do you evolve your app? What is the ‘end of life’ story for your app?

We’ll cover the following:

  • Business models
  • Office Store licensing service
  • Setting the price
  • Updating prices and apps
  • License states
  • Withdrawing your app (end of life)

What business model should you choose?

You’ve just written your amazing app — now what? Should you give it away for free? Show ads on it? Charge money? How much money? Well, it comes down to a few factors:

  • How much do they trust your app? Do you have positive reviews/ratings and high download counts? Do you have a brand they know already? We know that trust is an important factor for users in deciding whether to buy an app.
  • How valuable is your app to customers? Does your app save the user thousands of dollars a month over their current work practices? Can users get a long enough trial to be convinced of this? Or is your app cool, but ultimately far from indispensable? Think about how to best convey the value so you can raise the price point. (We’ll cover the fine tuning of how to reach customers in a subsequent blog post, including good descriptions, SEO, promotion, and upsell.)
  • Are you repackaging an existing business? If so, you probably want to choose a comparable cost. Do your research on the competition first to make sure that your price is competitive.
  • Is reach more important than direct revenue? If your goal is to reach millions of users so that you can connect your service (likely with its own identity and monetization model) into users’ Office experience, then choosing free will give you far more customers than a paid app will. When developing apps for Office, consider whether it’s more important to reach a lot of users (for example with mail apps, which doesn’t yet have licensing support) or to directly monetize (using content or task pane apps which do have licensing support).
  • Can ads support your app? A mortgage calculator app might have a great revenue opportunity via ad click through (there’s a lot of money in ads for refinancing and mortgage applications). Be mindful that while you’re free to use third-party ad services in your app, apps that are pure adware will be rejected from the store.
  • Can you differentiate your service so that you have a free-to-everyone baseline service, and a premium service for those who value your service enough to pay? You might offer an unlimited trial for basic charting (to get as many customers as you can), but require users to purchase your app to view data at a higher granularity of detail.
  • Or maybe you just want to prove to yourself that you can write a popular app (or you want to establish a reputation), and so you’ll list it for free.

It’s worth noting that you don’t have to know all the answers up front. You can list your app, use metrics to see how it fares, and then tune your business model appropriately.

Why sell through the Office Store licensing service?

We built the licensing service to make it really easy for developers to sell and users to buy from the Office Store.

  • Users will be able to use one identity regardless of the apps they acquire (no need to sign up with a new identity with each and every app they buy).
  • Users will buy in confidence using the Microsoft commerce system, and trust it to protect their data. Users who buy from the Windows 8 Store, Windows Phone Store, or Xbox Store won’t need to reenter their credit card details each time.
  • Users will be able to buy apps, regardless of the country or region where they reside—we’ll work out currency conversion and taxes. With more than a hundred currencies supported, we’ll provide developers access to a worldwide market for their apps.
  • Users (of SharePoint) can buy multi-user licenses and site licenses (i.e. unlimited user licenses).
  • Developers won’t need to make heavyweight investments in identity systems, eCommerce, or licensing in order to protect their service. The Office Store makes it simple for you.

There may be scenarios where you want to sell your app for Office or SharePoint in the same way you’re selling your existing service (if this is the case, list your app for free and ensure that it has some intrinsic value before asking the user to pay money on your site). We’ve designed the licensing service to be attractive to developers and users, and to meet a wide range of scenarios.

Note also that purchase support (including the licensing service) is currently not available for mail apps. We are working on rolling this capability out in future releases.

How can the Seller Dashboard help with pricing your app?

The options in the Seller Dashboard are simple. You can list your app as Free or Paid. If it is paid, you can also set the following:

  • Trial length: No trial, Trial for N days, Unlimited trial
  • Price point: You can price your app up to $999.
  • Seats: Per-user price
  • Site License: Is a site license price available? If so, is it 10x the per-user price, 100x the per-user price, or something in between?

Like other marketplaces, we automatically convert the price into other currencies and work out the taxes. We do this so that users across the world can buy your app.

Note that with apps for Office, you just set a price. With apps for SharePoint, you set the price per user and state whether you want to support site (unlimited user) licenses. We’ll post soon about how you can buy apps for SharePoint for an entire organization, and how you can deploy free apps for mail and apps for Office to your organization.

How do you know how well your app is doing?

You’ll be able to use the statistics in the Seller Dashboard to monitor page views and downloads (of free, trial, and paid). This will tell you how well your app is faring.

  • If you have a large number of page views but few downloads, your description or screen shots may not be attracting enough interest. Think about how to convey the purpose and value of your app more clearly. As mentioned earlier, we’ll cover this in a future blog post.
  • If you have lots of trial downloads, but few purchases, then either the price is too high or the value of paying isn’t clear enough. Consider lowering the price point, or think about how to add more upsell into the trial experience.
  • For SharePoint apps, you’ll also be able to see the number of times your app has run. Note that this data only counts usage for the subset of SharePoint deployments for which reporting is enabled, so don’t draw direct conclusions about the difference between the number of downloads and app usage.

You can also implement your own service-side logic to count the number of unique users hitting your site. To do this, look for the unique user ID in the Licensing token—our upcoming post on how to use licensing will give you a sample for this. This can help you differentiate new users from old.

What’s the right way to add different experiences for each license state?

To allow you to find the strategy that’s right for your service/business, the Office Store offers you the flexibility to update your license type at any time, and to change the price point at any time. This includes switching from free to paid (or vice versa), and it also includes your deciding on what trials mean for your service. For example: Is the trial experience identical to the paid experience, except that it ends after 30 days? Is the trial experience a subset of a richer paid experience? It’s up to your code and what works to drive the best conversion rate for your app and most success for your business.

There is one app binary for free, trial, and paid modes—it’s your code (either in the app binary or in your externally hosted web service) that determines the users’ experience. The SharePoint and Office platforms won’t automatically stop the app working on the thirty-first day of a thirty-day trial – instead, the platform will empower your app to do what you program it to do.

To achieve this, you must parse the Licensing token and classify the user. We’ll post a code sample for this very soon, but here’s the overview:

  • Has the user bought the app? Great—give them a full-fledged experience.
  • One important call-out is that if you went from free to paid, be mindful to make sure those older users (who got the app when it was free) also get a full-fledged experience. Choosing when to switch from free to paid is crucial—balancing getting great downloads/usage while free vs. getting revenue while paid.
  • Is the user within the valid portion of their trial? If so, you define whether you want the user to have a full or degraded experience. Take note of the trial expiration date to understand how strongly you want to upsell (encourage the user to buy the app).
  • Has the trial expired? Your app must decide what to do—you may do nothing except tell the user to buy the app, or you may provide a read-only experience. Your call.
  • Are they unlicensed users? This state is specific to SharePoint and works as follows: if (licensed) user A adds an app to their SharePoint site, and then (unlicensed) user B visits the site, what does user B see? Similar to expired trials, it’s your call whether the app is read-only, fully functional, or something else.

Another important call-out is that during this Preview period, we don’t support taking money for apps, but this capability is coming soon. If you submit an app during Preview that you want to charge for, you’ll want to follow this model:

  • In the Seller Dashboard: Choose paid app, make sure that you choose a trial period of >30 days, and set the price point for your app.
  • In the app itself, follow the licensing sample: ensure that you are aware of the trial expiration date, and support experiences for users who are within trials vs. those who have expired trials.

The Office Store will automatically extend Preview users’ trial expiration dates so that those users can stay in trial mode until we’re ready to take purchases.

And finally, when ending the life of your app, pay attention to the 90-day withdrawal period

There will come a time when you decide that you don’t want to support your app any more. Here we struck a balance between the motivation of the developer (who wants to stop immediately) and the interests of customers (who often buy software with years of support). The minimum withdrawal period for apps in the Office Store is 90 days. This doesn’t stop you from offering more support if you want (just state this in your app’s description).

When you withdraw your app, you’ll need to follow one or two patterns—the case where your apps has a web service, and the case where it doesn’t.

If your app doesn’t have a web service component, this may be pretty straightforward. Simply go to the Seller Dashboard and withdraw your app. It will be hidden for all new customers. Existing customers will be notified in the app launcher that the app is withdrawing soon, and they’ll have three months to transition their business to use another app and to extract their data. As the developer, you have no further obligations.

For apps (for Office or SharePoint) that do have a web service component, there is an additional requirement that you must maintain the web service for 90 days. You are contractually liable to customers if you fail to do so.

If there is a sustained period of outage for your service (for technical, legal, or other reasons), we encourage to you to reach out to us through the Support link on https://dev.office.com so we can best help you and your customers.

Conclusion

I hope you found it interesting to read about how the Office Store helps you grow your business with apps. While there are a lot of dimensions you can consider, nothing beats submitting your great app and using real user feedback to tune and improve the business model.

Call to action:

  • Build an amazing app that users will want to pay money for!
  • Think about what business model is right for your app.
  • Watch out for the upcoming code sample post on protecting your app and detecting licensing state.
  • Add rich trials support to your app for Office/SharePoint, and submit it to the store.
  • Then keep checking on the app metrics in the Seller Dashboard and iterate.

- David