I feel that none of the provided answers are complete or self-contained, so after digging my way through this swamp, here's the steps I think are necessary to get the (utterly self-evident) requirement of an update to work:
Make sure your Product Id changes every time you build. If you don't, you'll always get the "already installed" message the OP mentioned.
<Product Id="*" ...>
Change the Product Version every time the product itself changes. I suppose the best option is to bind it to an assembly version (which should be auto-incremented as well), but of course you could also just change it manually. This step is not strictly required if you use the AllowSameVersionUpgrades attribute in point 4, but I'd venture to say that keeping your product version constant is bad practise in any case.
<Product Version="!(bind.FileVersion.MyAssemblyDll)" ...>
<File Id="MyAssemblyDll" Name="$(var.001_Application.MyAssembly.TargetFileName)" Source="$(var.001_Application.MyAssembly.TargetPath)" />
Keep your UpgradeCode constant (e.g.):
<Product UpgradeCode="f4d7f199-28f6-45d5-ad99-7c62938274be" ...>
Add the MajorUpgrade element (from Wix 3.5.1315.0). To circumnavigate the catch that the MajorUpgrade will disregard changes in the revision number of the product version, add the AllowSameVersionUpgrades (or if you prefer AllowDowngrades) attribute. This way, you will be able to upgrade from e.g. 1.0.0.7
to 1.0.0.8
. and not just from 1.0.7.0
to 1.0.8.0
. If you don't do this, you may see multiple installations in Programs and Features.
<MajorUpgrade AllowSameVersionUpgrades="yes" DowngradeErrorMessage="A newer version of [ProductName] is already installed." />
Here's my whole .wix file (relevant parts, the two fragments that lead to the assembly which is used for product binding are mostly optional and for illustration, any way you can get a hold of the assembly will work):
<?xml version="1.0" encoding="UTF-8"?>
<?define ProductVersion="!(bind.FileVersion.MyAssemblyDll)"?>
<?define UpgradeCode="f4d7f199-28f6-45d5-ad99-7c62938274be"?>
<Wix xmlns="http://schemas.microsoft.com/wix/2006/wi" xmlns:netfx="http://schemas.microsoft.com/wix/NetFxExtension">
<Product
Id="*"
Name="My Product's name"
Language="1033"
Version="$(var.ProductVersion)"
Manufacturer="My company"
UpgradeCode="$(var.UpgradeCode)"
Codepage="1252">
<Package
InstallerVersion="200"
Compressed="yes"
InstallScope="perUser"
Description="My product description"
Manufacturer="My company"
Languages="1033"
SummaryCodepage="1252"
InstallPrivileges="limited" />
<MajorUpgrade AllowSameVersionUpgrades="yes"
DowngradeErrorMessage="A newer version of [ProductName] is already installed. If you are sure you want to downgrade, remove the existing installation via Programs and Features." />
</Product>
<Fragment>
<Directory Id="TARGETDIR" Name="SourceDir">
<Directory Id="LocalAppDataFolder">
<Directory Id="INSTALLFOLDER" Name="My Install Dir" >
<Component Id="INSTALLFOLDER" Guid="f6ba8a12-6493-4911-8edd-dce90e1d8e8b" >
<RemoveFolder On="both" Id="INSTALLFOLDER"/>
<RegistryValue Root="HKCU" Key="Software[Manufacturer][ProductName]" Type="string" Value="My Registry value" />
</Component>
</Directory>
</Directory>
</Directory>
</Fragment>
<Fragment>
<ComponentGroup Id="ProductComponents" >
<Component Id="ProductComponent" Guid="1939f0f5-19f6-498b-bf95-8f1c81501294" DiskId="1" Directory="INSTALLFOLDER" >
<File Id="MyAssemblyDll" Name="$(var.001_MyApplication.MyAssembly.TargetFileName)" Source="$(var.001_MyApplication.MyAssembly.TargetPath)" />
</Component>
</ComponentGroup>
</Fragment>
</Wix>
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