> regulate that down to something reasonable like 5% or 3%
How is 5% "reasonable?" Who determines that? That's not something up for a vote -- that's up to the market.
Let's say you have an iOS app.
If you sell it for $5 on the App Store, you keep $3.5. And you sell 100,000.
App Store nets you $350k.
And let's say you sold the app direct to users and did everything yourself:
$5 sales price, you keep $5 however, you also have to collect and remit sales tax for jurisdictions in which you sell. Your street price is $5 + tax, and you keep the $5 but you incur some expense for sales tax compliance.
You have to use a payment processor. That's 2.9% + $0.30 per transaction. So if you sold 100k apps at $5, that's $455,500 in revenue after credit card fees are paid.
However, there's also chargebacks. Chargeback ratio averages roughly 0.6% across all industries (it's much higher for digital goods and CNP transactions -- so let's call it 1.5%) So from 100k sales, you really sell 98,5000, so your revenue is $448,667 (after cc fees.) However, you have 1500 in chargebacks that cost $20 each (per stripe.). So that's $30k in chargeback fees. So now your revenue is $418,667. Apple rarely loses chargebacks and refunds are extremely rare. So that sales loss is negligible.
You also have to set up a server to serve the downloads and pay hosting, storage, and bandwidth. As well as shipping updates to all of your customers. As well as ensuring updates are compatible for any iOS version your customers might be using. There's going to be some level of customer support required. That's a non-zero cost.
Finally, how are people going to discover your app? You aren't on any app stores, so you have to advertise. You'll need to market. And -- convince people that you aren't going to infect their device with malware.
Let's just assume that you sell just as many outside the App Store as you would doing it yourself. (That won't happen, but let's assume your marketing is so good that it's the case.)
The difference is $419-$350k. (That's assuming zero expense for hosting, marketing, customer support, etc.) So you're "losing" $69k per year. After tax however -- $280k from the App Store, $335k doing it yourself. So $55k additional. Yet you have hosting, customer support, marketing -- etc. $55k per year as a salary for doing those tasks is tiny and that doesn't include the cost of the hosting and bandwidth.
This is the real problem, the crApp Store race to the bottom. Apple's cut was never really the problem. The cut is obscene, but only because the prices are already obscenely low. I'd be happy to give Apple 50% if I could sell my software for higher prices.
> And you sell 100,000.
Good luck with that.
> You also have to set up a server to serve the downloads and pay hosting, storage, and bandwidth.
Cheap.
> As well as shipping updates to all of your customers. As well as ensuring updates are compatible for any iOS version your customers might be using. There's going to be some level of customer support required.
You have to do these things anyway.
> Finally, how are people going to discover your app? You aren't on any app stores, so you have to advertise. You'll need to market. And -- convince people that you aren't going to infect their device with malware.
You have to do all of this stuff regardless of whether you're in the App Store. As an App Store developer myself, I can tell you that Apple absolutely does not do these things for you.
Notice how many Mac developers, given the choice, choose to distribute themselves rather than via the Mac App Store. They don't see the App Store as a win like you do.
> How is 5% "reasonable?" Who determines that? That's not something up for a vote -- that's up to the market.
If you ask Apple themselves to split the payment processing from the hosting and 'marketing', they claim it's 3% and 27%.
So if you could use their payment processing by itself, that would put you at $485k before server costs, not $419k. So you can have very nice servers and over a third more revenue.
You'll have to decide whether being in the main app store is important enough to pay a big percentage. And advertising and updates and customer support are costs either way, so please don't imply you only pay them if you avoid the app store.
> So if you could use their payment processing by itself, that would put you at $485k before server costs, not $419k. So you can have very nice servers and over a third more revenue.
Most companies don't do their own payment processing. They have accounts with companies that provide merchant services (e.g. WorldPay, Ayden, various investment banks) under specially negotiated contracts. These contracts would cover contingencies that wouldn't apply to "normal" customers and there's obviously a premium to pay for that. What you're demanding is the financial equivalent of adding millions of people to an individual's credit card account.
Why would you think a for-profit company (or for that matter, any financially sensible individual) would should share the financial benefits its negotiated for itself with millions of others? Not only would Apple be introduced to additional legal and financial liability, but so would the payment processor.
You're ignoring my point almost entirely. I'm sorry for not adding "the equivalent of their payment processing". If Apple can do it for 3%, I'm sure other companies could do it for 4.5%, and the rest of my argument doesn't change at all.
Though I do have an answer to "why"! It's because Apple claims they want to be in charge of payments to protect their users. Even if we ignore the "charge slightly more and make tons of money" plan.
> Though I do have an answer to "why"! It's because Apple claims they want to be in charge of payments to protect their users. Even if we ignore the "charge slightly more and make tons of money" plan.
There's a difference between being charging payments as a service and acting as a financial fiduciary on behalf millions of developers. I don't think you understand the legal gravity of the latter.
How is 5% "reasonable?" Who determines that? That's not something up for a vote -- that's up to the market.
Let's say you have an iOS app.
If you sell it for $5 on the App Store, you keep $3.5. And you sell 100,000.
App Store nets you $350k.
And let's say you sold the app direct to users and did everything yourself:
$5 sales price, you keep $5 however, you also have to collect and remit sales tax for jurisdictions in which you sell. Your street price is $5 + tax, and you keep the $5 but you incur some expense for sales tax compliance.
You have to use a payment processor. That's 2.9% + $0.30 per transaction. So if you sold 100k apps at $5, that's $455,500 in revenue after credit card fees are paid.
However, there's also chargebacks. Chargeback ratio averages roughly 0.6% across all industries (it's much higher for digital goods and CNP transactions -- so let's call it 1.5%) So from 100k sales, you really sell 98,5000, so your revenue is $448,667 (after cc fees.) However, you have 1500 in chargebacks that cost $20 each (per stripe.). So that's $30k in chargeback fees. So now your revenue is $418,667. Apple rarely loses chargebacks and refunds are extremely rare. So that sales loss is negligible.
You also have to set up a server to serve the downloads and pay hosting, storage, and bandwidth. As well as shipping updates to all of your customers. As well as ensuring updates are compatible for any iOS version your customers might be using. There's going to be some level of customer support required. That's a non-zero cost.
Finally, how are people going to discover your app? You aren't on any app stores, so you have to advertise. You'll need to market. And -- convince people that you aren't going to infect their device with malware.
Let's just assume that you sell just as many outside the App Store as you would doing it yourself. (That won't happen, but let's assume your marketing is so good that it's the case.)
The difference is $419-$350k. (That's assuming zero expense for hosting, marketing, customer support, etc.) So you're "losing" $69k per year. After tax however -- $280k from the App Store, $335k doing it yourself. So $55k additional. Yet you have hosting, customer support, marketing -- etc. $55k per year as a salary for doing those tasks is tiny and that doesn't include the cost of the hosting and bandwidth.