Today’s developers don’t need what the App Store offers

https://capiche.com/e/ecommerce-and-app-store-fees-compared

by awwstn • 6 years ago

112 65 6 years ago

latexr2• 6 years ago

Today, a free app brings Apple zero revenue

Today and always, a free app brings Apple $99/year for a developer account, which is mandatory to publish on the App Store.

artsyca2• 6 years ago

Bro. While technically true, $99/year is actually less than nothing if you really think about it.

Edit: do the math -- $99/year x 1 developer account versus even $1 for the app for a modest number of users. you're dealing with a fixed price versus a scaling factor.

logical_proof• 6 years ago

It also includes the purchase of a computer

zuppy• 6 years ago

Don’t forget about the ~1000$ per device customers pay, which should cover whatever they do with the appstore.

mysterydip• 6 years ago

Don't forget the forced upgrades every handful of years for developers as the latest xcode is required for the latest ios, the latest osx required for the latest xcode, and your device you bought doesn't support the new osx.

Granted I've only had to do that twice in a decade, but I can still develop android apps on any old equipment I want.

godzillabrennus• 6 years ago

If I recall correctly they had different tiers back when this was a MAC only developer requirement (before iPhone).

I was a student and signed up to tinker for about $99/year under that tier for access to xCode (and they sent me a free t-shirt for every new version of OSX.

I think you could spend a lot more money for a full enterprise dev account.

Not that I fault Apple for trying to profit from this creation of theirs but the ambiguity and lack of standardized enforcement is problematic.

I don’t even like Hey. I’ve posted about why.

However, I can’t differentiate between the Hey app and Fastmail. Allowing one without the other seems crazy to me.

epx• 6 years ago

They sell a lot of phones thanks to a healthy ecosystem.

gregmac• 6 years ago

This is actually fairly significant.

As a point of comparison, in 2019, Apple did about 50 billion in sales [1], which means they made about $15 billion

In 2018 (latest I could find numbers for) they reportedly had 20 million registered developers [2] so that's another $2 billion. That's 3.5% of their 2019 net income of $55 billion [3] (of course there are costs to running the app store, distribution, etc that aren't accounted for in here).

It makes me think of Costco -- whose membership fees make up nearly all their net income [4]. Don't make money from the thing, make money from enabling access to the thing -- well or I guess in Apple's case, make money from both.

[1] https://www.cnbc.com/2020/01/07/apple-app-store-had-estimate...

[2] https://techcrunch.com/2018/06/04/app-store-hits-20m-registe...

[3] https://www.macrotrends.net/stocks/charts/AAPL/apple/net-inc...

[4] https://money.com/costco-doesnt-make-much-money-selling-you-...

kevindong4• 6 years ago

In 2018 (latest I could find numbers for) they reportedly had 20 million registered developers

Keep in mind that the term "registered developer" is fairly ambiguous. Does it include non-paying developers? Does it include all developers under a single business account (e.g. at one of my jobs, I was a registered developer under a broader organizational account)?

ksec• 6 years ago

Yes that is the figure I point out whenever I look at Mac business. Which has 100M Active user [1]. i.e at least 20% of Mac users are Apple registered developers. They will all need to buy a Mac it also contribute to their Mac bottomline. And since there are also tons of Web Developers and Developers form other domain on the Mac, it would not be far fetch to say Developers is one of the largest user group on the platform.

This is also the reason why I dont buy the argument about App Store 30% cut bringing you the development tools. Those are well covered by the $99 and more. Now thinking about it, I would be surprised if the reviewing of Apps were not covered by the $2B annual developer fees alone.

[1] https://techcrunch.com/2018/10/30/there-are-now-100-million-...

cageface• 6 years ago

A lot of people buy iPhones because of the superior app ecosystem and that's all thanks to developers, including those making free apps. So it's false to say Apple makes no money off free apps.

maguay9• 6 years ago

Author here, that’s an excellent point, one I overlooked with that statement and that Apple seems to be overlooking in their letter to the Hey team as well, where they said

“We understand that Basecamp has developed a number of apps and many subsequent versions for the App Store for many years, and that the App Store has distributed millions of these apps to iOS users. These apps do not offer in-app purchase — and, consequently, have not contributed any revenue to the App Store over the last eight years.”

Which shows how unlikely Apple is to back down here, unfortunately.

maguay9• 6 years ago

Author here: Great point, I should have noted that. Developers also have to use Apple devices, and the free apps increase the appeal of Apple devices, both of which drive additional revenue.

From an App Store revenue perspective, the $99/year seems incredibly insignificant compared to what any tiny percentage of sales from SaaS subscriptions would look like otherwise. That would have been a better way to frame it.

coffeefirst• 6 years ago

True, and that still undersells what the app ecosystem does.

Even if Apple made $0 off of all apps, apps are a complementary product to their devices. Apple knows this, it's part of why they always tout all the apps they didn't make. Every app you find useful on your iphone makes it more valuable to you, and keeps you in their ecosystem.

Sephr• 6 years ago

Not only do developers pay $99/year. Apple actually claims that they don't:

https://twitter.com/sephr/status/1133804665961734144

https://www.apple.com/ios/app-store/principles-practices/

user_50123890• 6 years ago

I doubt there are really too many of those. At the most, I'd say under 50k.

The real reason for the fee is just to stop spammers on the App store. It probably blocks around 99% of them, without the fee I'd wager the appstore would be unusable.

aabbcc1241• 6 years ago

Also you need apple device to compile

gretch• 6 years ago

The App Store model is thriving. Absolutely bursting at the seems gushing cash... SaaS did not “kill the App Store model”

dang• 6 years ago

We've changed the baity title to the less baity subtitle.

NovemberWhiskey• 6 years ago

The new definition of 'dead' is 'doing $50bn a year in sales'?

k__2• 6 years ago

If you can get away with a web app, do it. It doesn't just save you the app store fees, it also gives you more control over your software.

arvinsim• 6 years ago

Unfortunately, Safari is not so friendly to those

k__2• 6 years ago

I know.

You're very lucky if your potential market isn't fond of the Apple ecosystem

noir_lord• 6 years ago

"not so friendly" is a nice understatement.

I'd go as far as to say Mobile Safari is actively bad at the technologies required to build a compelling web application so that they don't threaten their cash piñata in the app store.

webbdev• 6 years ago

1000% this. The App Store is stagnant because Apple refuses to improve their store to where developers choose to distribute their app on the App Store. 30% may have made sense in 2008, but it certainly doesn’t make any sense in 2020.

maguay9• 6 years ago

Author here. It would be interesting to imagine what Apple could offer SaaS developers that would make them want to pay the App Store a percentage.

Imagine if Amazon was the dominant platform, and they were the ones charging an App Store fee, but somehow that included AWS fees as well...

zeroimpl• 6 years ago

A subscription fee closer to 10% starts to look attractive at least for smaller ventures. By dealing with taxes, exchange rates and credit cards, that is a fairly nice set of things to not even need to think about.

But the developer APIs/processes for dealing with in-app purchases are brutal and virtually unchanged over the past 5 years.

chadcmulligan3• 6 years ago

SaaS costs money to though - there's not an analysis of that in this article, if you use AWS or Azure they cost as well. I can see Apple need to charge for their service (I'd want a lot to argue with developers all day :-)), they could probably charge less though, but the same argument can be made for all their products.

Personally I think its great that I can write some code publish an App and Apple looks after a lot of stuff for me, would I like it if they charge less, sure - but its a level playing field, everyone on the App Store pays the same, so just add 30% to your price and move on. As a user, I like that I can reasonably trust the apps I download from the App Store - and thats who apples customers are, users, not developers. If you want to use apples service then you have to pay a premium, if you don't like it you can probably go to android (I'm sure this is Apples position).

maguay9• 6 years ago

Author here, and agreed—I mentioned the payment processing fees, and that SaaS might also pay Stripe an additional 1% (or something like Recurly even more) to manage subscriptions, but that’s only part of the costs.

And that’s the problem I think. SaaS already has all these other costs, from hosting to account management to cross-device development, none of which the App Store help with. The App Store does offer native app developers value, in licensing, distribution, updates, and more—none of which apply to the SaaS model. Which is where I think part of the conflict comes from: SaaS developers incur the costs of building SaaS, get little-to-no value from the App Store, and so find the 30% fee more frustrating.

chadcmulligan3• 6 years ago

Yes, I see that, but I'd say that Apple isn't really interested in making SaaS players lives easier - its not their business.

Edit: and upon thought, SaaS actually competes with their business model.

kevindong4• 6 years ago

Amazon’s Kindle store charges 30%, but with conditions. Your book must cost $2.99 to $9.99, and 20% less than any print copiesell. It must be exclusive to the Kindle to get this rate in some markets. Any VAT comes out of your cut, as does a download fee of $0.15/mb. Sell a $9.99 book, and you might get $6.69. Don’t meet those requirements, and Amazon charges 65% of your selling price. Sell a $10 book, get only $3.50.

That is an incredible fee to pay for a digital good. I looked into this expecting the author to be just outright lying. There is one factual inaccuracy (Amazon and the ebook author split proceeds after accounting for VAT/delivery charges), but it is substantially accurately.

https://kdp.amazon.com/en_US/help/topic/G200634500

https://kdp.amazon.com/en_US/help/topic/G200644210

https://kdp.amazon.com/en_US/help/topic/G200634560

maguay9• 6 years ago

Author here, thank you for double-checking on Amazon’s VAT charges—I’ll update the post with that info.

Amazon’s Kindle store pricing is incredibly steep and demanding on authors. At least now you don’t have to make your book exclusive to Kindle in all markets to get the Amazon’s cut down to 30%, but it’s still wild.

smnrchrds2• 6 years ago

It's a common theme. X used to be expensive to do. People used to pay Y to get X. Through technological advancements, X has become much cheaper or even practically free now. The entity closest to the source of X still charges Y for it and does not pass any of the savings to the entities and consumers below.

Your example is one. Printing, distributing, storing, displaying, and shipping physical books was expensive. Booksellers got ~50–60% of the book price for their trouble. Given the cost of doing business, it was a fair and reasonable price. All those costs are near zero now. Booksellers still want their 60%, because they can. They prefer to keep all the savings and pass none downstream.

The same is true for digital distribution, banking monthly and transaction fees, TI calculators, "convenience fee" for printing your own ticket with your own printer at home, ...

Until recently, brokerages charged exorbitant fees per trade. This is even though trades were effectively free for them and they were earning money in other ways. The status quo of charging for something that would naturally be free was preserved for decades, before a new kid came to the block and ruined the party for everyone. Now the consumers are much better off.

We as the consumers should demand and try to make more of this happen.

kevindong4• 6 years ago

Ebook pricing never really made sense to me. During college when I was buying textbooks, the ebooks on Amazon were frequently significantly more expensive than a new copy of the physical book. Not sure if that's still the case though.

Robinhood has truly disrupted the brokerage market. But I'm curious about their viability now that a ton of mainstream brokerage have also dropped commissions.

asicsp• 6 years ago

I wish more authors used leanpub/gumroad and the likes. But these sites are nowhere close amazon's popularity, not to mention amazon has reviews and these sites have only ratings or not even that.

If authors aren't using Kindle Unlimited, then using such sites and pushing it to their readers on social media (might even offer lower cost because of higher earnings) might atleast be a good start.

hashbig• 6 years ago

Is it me or the math in the article doesn't make sense. The author is accumulating the costs for selling a SINGLE instance of the product on Shopify, Ebay, Amazon, and Walmart. When in reality, you would be paying only for the one you sold your product through, even if you offer your product on multiple platforms.

michaelmrose• 6 years ago

A modest proposal: Legally require sales and lease of computers herein to include laptops, tablets, phones provide owner or lessee with root access to devices including right to modify device software and use services normally associated with sale/lease of device including updates and cloud services without prejudices insofar as how you use it.

This is to say they cannot deny you updates or access to icloud but if you modify your software so as to prevent it from working that is solely on you.

This would make it impossible for Apple to prevent third parties from offering their own app stores which could offer devs their own terms.

It's exceptionally likely that prices would stabilize under 10%.

RandallBrown• 6 years ago

The App Store offers discoverability, hosting, reviews/ratings, payment processing, return handling, and (limited) QA in the form of the review process.

If I think about how much time I'd spend building and managing all that stuff on top of building my app, I wouldn't be surprised if 30% was actually a pretty good bargain.

I would love if Apple lowered their percentage, but I don't feel particularly ripped off by it.

itskwanyall• 6 years ago

As DHH explained though, letting Apple manage the payments process means that the user becomes Apple’s customer rather than yours, which is actually a negative for them since they can no longer handle any problems customers have with billing.

QA in the form of the review process

They are checking that you aren’t breaking _their_ rules, they’re not looking out for you. This is akin to companies telling you their HR/legal department is there to help you. They are not, they are there to protect the company.

I would love if Apple lowered their percentage, but I don’t feel particularly ripped off by it.

The problem is you don’t get a choice whether you think they are ripping you off or not

lotsofpulp• 6 years ago

etting Apple manage the payments process means that the user becomes Apple’s customer rather than yours, which is actually a negative for them since they can no longer handle any problems customers have with billing.

As a buyer, it’s awesome to be able to use Apple manage the payment process. I am able to cancel recurring services far more easily (I don’t ever want to call someone or mail something), and I trust them to be more secure with my payment info.

Axsuul• 6 years ago

To make it fair for both parties, Apple's App Store needs to adopt a hybrid/affiliate model. The App Store still provides lots of value in terms of discoverability and marketing. Many users find apps to download while browsing the App Store. The App Store will also feature apps while continually optimizing its algorithms to ensure the right apps are shown to the user in order to increase conversion rates, thereby benefiting the developer. Ranking highly on the App Store is very lucrative just like on Google. So this notion of developers not needing the App Store doesn't jive with me, especially for smaller developers who don't have the brand awareness that Basecamp does.

For that, Apple deserves to be paid for it but only if new users are referred from the App Store–an affiliate commission. That 30% is more than worth the extra marketing and customers you wouldn't otherwise have gotten. For anyone that isn't referred, the fee shouldn't apply.

maguay9• 6 years ago

Author here—I guess, to a degree, that’s how Apple sees it too, it’s just they think they deserve a larger percent than developers want to give. There are apps—business software including Adobe and Microsoft’s subscriptions, media subscriptions, and more—that offer subscriptions directly on their site, plus offer in-app purchase subscriptions on their mobile apps. If you’ve already subscribed on their site, Apple gets nothing, but Apple gets a percent of any sales that originate from the App Store.

If it were closer to just payment processing + an affiliate cut (say 3% plus a 7% affiliate cut) perhaps it’d frustrate devs less. And for what it’s worth, Apple does take only 15% on subscriptions after the first year which gets closer.

cma• 6 years ago

It's like a store not needing the protection the mob offers

butz• 6 years ago

Good time to concentrate on pushing progressive web apps (PWAs) forward: ask for browser developers to agree on standards and implement few missing features that are available only on native, like file system support. Build more PWAs, even if some features are still not available - they might be tomorrow. Let users know about PWAs, what are the benefits (usually faster install and smaller size), how to install them.

TheCoelacanth• 6 years ago

Apple is never going to allow full PWA support on iOS. It's too big of a threat to their App Store revenue.

tinus_hn2• 6 years ago

Then don’t publish on the App Store

lexs• 6 years ago

What exactly is the alternative for iOS devices?

tinus_hn2• 6 years ago

I thought you said you didn’t need what the App Store offers?

dhsysusbsjsi• 6 years ago

This article makes a good case for why ALL of these big monopolistic corporations need to be more heavily regulated due to abusing their market power in all of the ways mentioned.

0_gravitas• 6 years ago

It's curious to see so many saying that these developers owe Apple x amount, but only a couple acknowledging that a steady stream of people developing apps for their locked-in platform is one of the only things keeping them relevant for anything beyond the most basic use-cases. I'm not an Apple guy nor an Apple developer (and hope to never be one), so I don't have an immediate skin in this race, but this kind of behavior just seems unhealthy overall, and reads as biting (one of) the hand(s) that feed(s) you.

For instance, people developing games mainly for windows is the only reason I'm not running a full Linux box right now (maybe some day, c'mon proton...). If MS made releasing on windows hostile enough to make a non-trivial number of people consider releasing titles linux-only, I would abandon it in a heart-beat.

warmfuzzykitten• 6 years ago

The article doesn't live up to the title (on Hacker News). Or, really, the actual title. SaaS means nothing to the developer of an iPhone/iPad app. Apple offers distribution, collection, and a limited form of discoverability. In addition - people don't talk about this much, but it's real - if you sell an app direct, no matter how much you protect it, if it's popular sooner or later some hacker will break your protection and offer downloads of your app for free. Apple protects you from your revenue suddenly going to zero because somebody "cracked" your app. That's why it's still possible to make millions from a $1 app. Not a bad deal.

Today’s developers don’t need what the App Store offers

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