There are thousands of desktop app developers that never got out of the hobby stage because they couldn’t get past the costs of processing payments, managing refunds, managing download servers, implementing licensing frameworks, implementing a smooth upgrade process, search engine optimization, establishing enough trust with users that they are confident they aren’t installing malware infected software, marketing, push notification infrastructure, and probably a few other things I’m not thinking of.

It’s probable that 30% is too much to pay for help with all of that, but people too often act like Apple’s just taxing them and providing no commensurate value at all.

Part of what makes it so galling is because Apple has those competencies in spades anyway (SREs, designers, datacenters, bizdev.)

Another aspect is that the App Store feels like a value-add for the actual marketed products — iPhones and iPads — and not something you are ever explicitly buying. It doesn’t show up on the receipt. People talk about buying a new iPhone, or getting then latest iPad. No one ever goes to the Apple store to buy the lates access to the App Store.

As such, Apple’s cut feels like it’s everything from cheeky to an abuse of their “monopoly” in the providers of iOS devices marketplace.

> Part of what makes it so galling is because Apple has those competencies in spades anyway (SREs, designers, datacenters, bizdev.)

But what do you mean 'anyway'? If Apple suddenly said 'you know what, App Store is EoL, do your own distribution' (because of legal or whatever reason) surely there would be a spade or two of those competencies that were consequently redundant?

I don't imagine they're hiring people to work on say Apple Maps; who subsequently say 'cor, good thing I'm here, someone should take a look at that unstaffed app store project'!

Trust and payments being the largest.

I download any random crap on my iOS devices trusting that the sandbox and permissions model will keep the app from doing too many things I don’t expect. I’m not downloading a random app on my computer.

I can also pay a lot easier on my phone than digging out my credit card.

i think you also forget that many people buy ipads because of apps created by developers ( in my case, i believe my app is the direct reason for the sale of my customer's ipad pro). and that developpers need to buy apple hardware to build and distribute on the store. those 30% come in addition to all the revenue generated by hardware sales, because of independant app developers.

So your customers are willing to pay at minimum $799 for an iPad Pro but don’t value your product enough for you to charge enough to make it a sustainable business?

Just maybe it’s a product market fit issue?

Over the life of the ipad, they'll have paid me more than the ipad. But it'll be over a few years. It's a market with a few hundreds potential users (maybe a thousand) per country, not more.

> There are thousands of desktop app developers that never got out of the hobby stage

There's so much money out there searching for an investment. It's a shame really.

Could you elaborate on this a little? I understand that Apple only takes 30% the first year and then they drop their commission to 15%. Is the commission on the purchase price of the app what makes it too expensive, or is it too great a cut out of your in app revenue?

That drop on commission is only for app subscriptions that continue longer than a year.

Thanks! I hadn't spotted that...

If your app was such a great one, you couldn’t convince your customers to pay enough to make up the difference?

Marking things up 43% generally impacts sales.

If it is a “specialized”,”pro” niche app people are usually willing to spend more.

It’s hard to make a living selling a niche app to price sensitive people.

Also if it is a niche app, with a small addressable market, how do you continue making money on it since their is no facility for upgrade pricing - especially since you have to keep releasing updates to support newer devices and new screen sizes?

"people are usually willing to spend more" : not in my case ( and probably many other)

when i say it is a niche market i mean it not only in terms of number of customers, but also in term of potential generated revenues. there are businesses , especially in artistic fields, where people simply aren't willing to spend a lot of money on accessories, even if they are useful to their job.

now i'm not saying i will never be able to be profitable enough. just that with my current marketshare ( which is very good on a local scale, but not yet worldwide), those 30% are what makes the difference.

ps : as for the revenue model, i had to invent some kind of pay per use model, based on in app purchases.

I think perhaps your business model isn't as solid as you might think. Producing an app is not a free pass to live on the revenue, and the market capture is an important part.

I'm not an app developer, I'm in the music industry (day job in IT infra), but it seems to me there are some people projecting their bad business sense onto Apple. As per my other comment in this thread, and the reply someone made for me, the commission drops on subscription based apps, could you not use a subscription, rather than your pay-per-use system (which sounds like a creative workaround, kudos) and then you'll get the benefit of the tax rolloff.

Trying to make your own way in this world is damn hard work, and if a business model falls apart because one needs to "pay taxes," Apple will not be the biggest problem for very long. I'm sure most here would agree that it stinks that Apple are demanding a 30% tax whilst paying ~0% to the U.S. Government, but that is the way of things for now.

I don’t understand your comment. I have other sources of revenue, mainly doing development for customers. I didn’t bet everything on that app and raised money on the expectation this would be a gold mine. I’m just stating a fact : without those 30%, in my present situation, i could live only based on this app revenues. With the 30% cut, i can’t.

I understand, I was inferring some blame on Apple's part from your commentary -- as though they were denying you a living from your app. Anyway, thanks for the discussion. Probably shouldn't necro this thread any more than I have :)

I’m sure most people could live off of less revenue if they didn’t have any expenses.

But, a niche product where people aren’t willing to spend money is a business model problem.

That's one way to look at it. All businesses come down to balancing income with expenses indeed. All i'm saying is that 30% cut on the income by apple makes it harder , and sometimes impossible , for some business model to survive.

This raises the question ‘harder than what’?

The services provided by the App Store would have to be present for the business exist at all.

So without the 30% Apple charges those businesses would certainly not survive unless they paid someone else for the services.

Understood.

But do you know how many businesses would die to be able to sell products that had a 70% gross profit margin?

I'm not sure about your calculation. A business with only 29% gross profit margin wouldn't be able to survive on the app store because they'd have to give 30% to apple.

Where did you get 29% from? I’m assuming that you are the only developer working on this (you didn’t say otherwise), for every $1 that someone spends, you get .70 cents.

But then why do you assume i've got no expenses ? Just because i'm the only one working on it doesn't mean i don't have to pay myself something to live. That's actually my point : the app doesn't generate enough revenue to cover my personnal expenses.

The marginal profit is the price the good sold for - the marginal cost. The only thing Apple has to do with this is the 30%.

The only fixed cost imposed by Apple is the $100 developer fee and whatever it cost to buy a Mac.

If it's a niche app, I'd imagine you would monetize it differently than a 99c clicker game (eg. sell a subscription to the app on your website, or supply it as a companion to hardware you sell, or something) and the app itself would most likely be free to install off the web store.

I've seen companies get around the upgrade pricing question by just releasing a new version of their app every year and deprecating the old one.