[ilovwindows]

30% of a revenue is extortion. Why should an app developer pay that fee? It's like owning almost half of a business.

Apple is the most developer hostile company.It charges $100 every year to devs for developing apps to it's platform. And additionally charge another 30% of their business. The worst thing is apps cannot use third party payments, why? Some people argue it's for security. I disagree. It's greed.

Tim Cook said it does not charge companies for services apps serves to end users e.g Uber, e-commerce, etc. Are your serious? It's like postal service saying hey we need 30% of every IPhone we deliver. Or the workers at china demanding cuts on every financial transactions that happens through the iPhone.

Some even argue devs need apple more than Apple needs devs. Do you guys know why Windows phone failed? Cos they didn't have enough devs developing enough apps. Take aways all the apps from IPhone, and what is it? A Brick.

[paul_f]

If a developer's net profit margin, after dev and marketing costs, is less than 60%, then Apple makes more money on the app than the developer. 30% is outrageous.

[simondotau]

You’re saying that 60% of 70% is less than 30%?

[kbelder]

He's saying that <60% minus 30% is <30%.

Assuming Apples takes their cut from gross revenue and not margin, which I believe is true.

[paul_f]

Sales price: $100

Apple's cut: $30

Costs (including dev and mktg): $40 (60% net profit)

Profit: $30

[DangitBobby]

Doesn't seem quite right.

Users Will Pay: $100

Dev Profit per $100: $60

Apples Cut/Profit: $30/$29.99

Dev Cut/Profit: $70/$42

[simondotau]

> Apples Cut/Profit: $30/$29.99

> Dev Cut/Profit: $70/$42

Apple's cut is $30 but their profit certainly isn't $30 minus one cent.

Obviously there's the hard cost of transactions, which includes but certainly isn't limited to merchant fees. If it's an international app, there's the currency exchange involved in selling that app in local currency, under local merchant rules. Apple also absorbs various costs caused by avoiding and dealing with fraud. The transaction could be performed with gift card, which means maintaining that network, physical manufacturing costs, retailer profit margin... I seriously doubt that Apple even breaks even on the 70% when the payment uses a gift card.

There's the work Apple does in policing their store. While it does irritate developers, the end result is that the App Store is significantly less overrun with scams and junk than it would otherwise be—which means that customers are going to be more trusting of your app than would be the case if the store was a total free-for-all.

Then of course there's a subset of consumers who discovered your app because it's in Apple's app store. Providing you these eyeballs is valuable and worth something.

And of course there are a lot of soft costs—Apple did put a lot of work into all the resources for developers. How you personally believe these should be accounted for is obviously a matter of personal opinion, but that work does cost money and has benefited developers. There's an argument to be made that some amount of it could be assigned to Apple's app store revenues.

[DangitBobby]

I don't really think it's unreasonable to think that the app store costs them $1 per $1000 they take in, even including all of the work you described. Tellingly, they avoided admitting to their actual margins during the hearing with EPIC.

[realityking]

That seems unrealistic considering credit card margins alone. Stripe will get you 2.9% + $0,30. Even if we assume Apple pays half that, it's already quite a bit more than you assume.

The physical gift card network is likely vastly more expensive. Not only are there frequent sales on these cards (I have no idea of why or how the economics of them work) but the cards need to be printed and the retailer will take a (small) cut.

Lastly, paid apps subsidise free apps. There is a ton of free apps, both from small indie devs and big businesses. They all pay $99/year. I'm pretty sure the bandwidth cost for all of Google's apps is a few orders of magnitude higher than that.

My, relatively unfounded, suspicion is that the App Store has a profit margin of around ~60%. Apple overall seems to strive for a gross profit margin of around 40% and it seems likely the App Store is doing a lot better. Of course this highly depends on what you consider part of the cost associated with the App Store.

[kbelder]

You're holding their margin % equal, but cutting 30% off revenue probably won't cut 30% off their margin costs.

In reality it's too complicated to figure with a simple formula. But, he was right if margin is a fixed cost (like, all initial development). If margin is purely an incremental cost (like network costs that increase with each sale), then he would be wrong.

[gondo]

Dev pays $99 each year for apple subscription. So until you make certain numbers, you are loosing money.

[simondotau]

Every developers knows ahead of time that Apple's integrative fee for [software licenses/developer support/hosting services/customer discovery/residual goodwill/merchant costs] is 30%. Your direct competitors probably aren't getting out of a comparable fee either, so it's not like the fee is making you uniquely uncompetitive. If you can't afford to maintain an app from 70% of the top line revenue perhaps the price of your app is too low?

For decades, developers were lucky to see 50% of the retail price. More likely they'd see 20-40% after the retailer and distributor took their cut. And then this 20-40% has to pay some very expensive licenses for software development tools (we forget that these tools used to be commercial software) as well as licence fees for any toolkits you might have used (such as Unreal Engine).

[cnlwsu]

Xbox, steam, google play store, Nintendo and sony are comparable. Same percentages and everything, 30% is kinda game industry standard. Game engines starting to take bigger cut too.

[CPLNTN]

> Take away all the apps from iPhone and what is it? A brick Saying that Apple needs devs more than devs need Apple is as stupid as saying the opposite. Is the same chicken/egg game. They both coexist and no one can exist without the other. Do you really think that dev can just trash iPhone apps and send a middle finger to Apple? I’ll tell you why it’s BS: 1 - iPhone users are more willing to pay for an app than android users. Given that Google take the same cut, you are just going to shoot yourself in the foot having less users. 2 - The iOS market share even if not as big as the android one, it’s still huge compared to what WS Phone was at its peak. Do you really think your app is that important that the average user is gonna buy and entire new phone (with an OS that he potentially never used) just to use your app? 3 - If you think ALL the devs can leave Apple, to invalidate pt 2, you are delusional. The moment you leave the store, another dev is just gonna eat your user base and profit from it.

The success of the platform always goes around the user base, not the developers. Developers make money from users, so the developers follow the user, not the other way around.

[ilovwindows]

A simple experiment will open your eyes wide.

Lets ship iPhones which cannot install any third party apps and see who goes bankrupt. Apple or the app developers?

No one with sane mind will by the iPhones. Where as devs can always make money from other platform like web.

Apple needs devs more than devs need apple. Proved !!!