this post was submitted on 17 Jan 2024
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It's a commission for sales that came from the app, meaning from Apple's platform, where they have roughly one billion above-average income users with a reputation for buying apps and subscriptions.
It's also worth keeping in mind that there are different ways of monetizing platforms, none of which are necessarily morally better or worse than the other. Microsoft's IDE, Visual Studio, is $45 or $250 per user per month (so $4500 annually for a team of ten). Xcode, Apple's IDE, is free. A business can offer its apps on the App Store, which also serves the files, for a grand total of $99/year.
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Amazon doesn't have to give Apple a huge chunk of cash though. Apps don't pay anything to Apple for real-world stuff being sold. Amazon pays nothing for the tens of billions of dollars purchased every year from iPhones. The only thing they pay Apple for is if someone uses the Prime Video app to buy or rent something or subscribe to Prime Video, but who does not already have an Amazon account (with saved card) that they're signed into. We're probably talking a number measured in the thousands of dollars. Uber, for example, pays Apple nothing other than their annual developer account fee (or fees, assuming they have multiple accounts).
Nobody is going to actually use this program so there's no real world extra accounting cost. Previously Apple charged 30% for a combined payment handling and commission. A court determined they had to let developers handle their own payments so Apple complied and said the commission is 27%. It's invariably cheaper to just stick with Apple's 30%.
Everyone always wants more money. Developers would love to pay less; Apple would love to make more. The 30% max fee (in practice less for many developers) has been pretty successful for everyone involved. I think people can quibble over the "right" number, but I don't think it's wrong that there's a sales commission for access to a profitable platform.
Important to note that the 30% cut is also only on developers that bring in >$1M in revenue from the App Store and in app purchases. Which is less than 1% of developers.
For those under $1M it’s only 15%, which is on par or cheaper than what developing your own payment processing or to use another third party processor.
15% is not cheaper than using your own payment processor, don't be silly. Stripe costs me around 3% and can be set up in five minutes.
Stripe standard is 3% plus 30 cents per transaction.
If your app costs $1 or you IAP costs $1, stripe would cost you 33 cents for that transaction. Or 33%.
To get down below 15% total you would need to have your average transaction would need to be $2.50 or higher.
The average app price on the App Store is 88 cents. https://www.statista.com/statistics/267346/average-apple-app-store-price-app/
And the median in app purchase is about $1.30. https://techcrunch.com/2022/09/13/apples-in-app-purchase-prices-jumped-40-year-over-year-likely-tied-to-privacy-changes/
The vast majority of developers would pay more to use something like stripe.
Is that using free apps to bring the average down?
How many purchases were actually made at such rates? Apple has a credit system last I checked which means the fee could be taken for a higher amount, bringing that commission down hugely.
I can't see that number mentioned.
It’s in one of the charts
Ah it's on one with a percentage on the other side, didn't see that. Are purchases individual card ones or from credit, I wonder?
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No, Apple only charges commission on purchases within the app using apples system. You can implement your own and tell people to make a purchase they need to go to your website.
That’s what Netflix has always done as one example.
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The article isn’t exactly clear, but it seems like Apple is going to allow third party processing for in app purchases now alongside using the App Store payment system, which will be subject to the App Store fee plus whatever the third party processing fee is, but linking to an external website will not. Apple is requiring information about revenue generated from third party payment systems within the app to set the appropriate App Store fee. 12 or 27% now down from 15 and 30%.
They are also explicitly going to allow apps to link to external websites for payment processing, which won’t be subject to any App Store fee.