What awesome progress! Leung created her pricing strategy and planned her pricing tiers. But she’s not done yet: Revenue sharing benefits both partners and Salesforce.
Keep reading to learn alongside Leung about her contractual options that maximize her app monetization, secure her relationship with Salesforce, and maximize the benefits to her customers.
As you create your AppExchange listing and add your pricing details, your team works in parallel with Salesforce to finalize your contract. This is also called a Partner Application Distribution Agreement (PADA).
When a partner like Cloudy Health signs a freemium app distribution agreement with Salesforce, they submit all of their orders through the Channel Order Application (COA). COA works with one monetization payment option: percentage of net revenue (PNR).
Remember PNR from when we discussed monthly and annual customer payment options?
Most ISV partners have PNR contracts, meaning most charge their users a fixed amount on a recurring basis, and pay Salesforce a fixed percentage of their monthly revenue. However, there are some special cases where your app may not qualify for PNR.
If your app is a non-PNR app, you may still have a revenue-sharing obligation with Salesforce. To list your app on AppExchange, you sign a contract with Salesforce which will spell out your obligation.
There’s a lot to learn about contracts. And contracts are specific to your business and to your app. What you need to know is that everything is going to be just fine. After you have your app, business plan, pricing model, and pricing strategy, your team works with AppExchange representatives to understand the contract terms.
Leung wants to understand a bit more about monetization options, PNR and non-PNR, to ensure she’s made the right pricing decisions for her app.
Sure, PNR stands for percentage of net revenue. But what does that really mean?
For Leung, that means Get Cloudy awards a percentage of their total revenue to Salesforce. They’re also responsible for submitting an order with Salesforce every time their Cloudy Health app is sold.
Simply put, anytime you sell your app, you pay a royalty back to Salesforce. Typically, it’s 15% of your app’s revenue.
What apps qualify for PNR? Paid Add-on Required, Freemium, and Paid apps qualify for PNR.
How does PNR work?
Leung looks at Cloudy Health’s pricing tiers, and jots out the PNR payments:
