3 ms·

> If you sell at $3 instead, your number of sales will go down by much more than the factor of three that you increased the price by. In a way, this is great.

> If you sell at $3 instead, your number of sales will go down by much more than the factor of three that you increased the price by. In a way, this is great. By charging less for software more people are able to enjoy your software and you make more money. It's a win-win. I think the only (but major) issue here is that 30% is a laughably high cut for Apple. This cut is so high that only really popular software can be profitable for the developers. There's a lot of useful software that won't get built because it's niche and isn't profitable after 30% is taken off the top.

HappyTypist 9y ago
Credit card fees at Apple's scale = $0.15 + ~1.5%
- Turing_Machine 9y ago
  The base fee isn't the only factor here in play here, though. People are much more willing to give Apple their credit card number than some unknown (to them) web site. Amazon works the same way. Just yesterday, in fact, I was looking for a replacement part for one of my tools. Google search turned up several options for the part number -- several "parts warehouse"-type sites and Amazon. The price was a couple of bucks higher on Amazon, but I bought it there nonetheless. Why? Because Amazon already has my CC info, and I trust them to actually deliver the product and keep my information secure. The other sites may be (in fact, probably are) trustworthy, but I don't know that. I have no idea how well they're securing my card information. I have no idea if they're even going to deliver the part in a timely manner. Amazon wound up getting my money, because saving two bucks just wasn't worth the risk and extra transaction friction. Same thing with the app stores. The dev is providing the software, and Apple is providing the infrastructure and the reputation. Is 30% too high for that? Maybe, maybe not. For an unknown dev, it may well be. If you're a well-known company with an established reputation, maybe it isn't. I've noticed that a lot of the big names (e.g., Bare Bones Software) have exited the app store of late.
  - pythonaut_16 9y ago
    Really though, having seen the vulnerabilities that have been found in many companies' websites, and their responses to them, I'm not so sure how trustworthy we can assume them to be. I prefer to use Amazon or Paypal as payment options on those sites whenever possible
BlackFly 9y ago
Actually, the quote you highlight is where I started to take umbrage with the blog. I'm willing to listen a person's opinion on what is ideal or fair, but here the author asserts an empirical fact without evidence. The evidence that I have actually heard[0] from valve indicates the opposite: that total revenue is unchanged by price. I am willing to believe that it can vary from product to product, but I am not willing to believe such an absolute assertion without any evidence. I agree with your point about 30%. 0: https://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell/ https://www.geekwire.com/2011/experiments-video-game-economi...
- jeremy7600 9y ago
  Did you skip this part of the article? "But then we did this different experiment where we did a sale. The sale is a highly promoted event that has ancillary media like comic books and movies associated with it. We do a 75 percent price reduction, our Counter-Strike experience tells us that our gross revenue would remain constant. Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40. Which is completely not predicted by our previous experience with silent price variation." and then: "Twenty-five percent, 50 percent and 75 percent very reliably generate different increases in gross revenue."

HappyTypist 9y ago

Credit card fees at Apple's scale = $0.15 + ~1.5%

Turing_Machine 9y ago
The base fee isn't the only factor here in play here, though. People are much more willing to give Apple their credit card number than some unknown (to them) web site. Amazon works the same way. Just yesterday, in fact, I was looking for a replacement part for one of my tools. Google search turned up several options for the part number -- several "parts warehouse"-type sites and Amazon. The price was a couple of bucks higher on Amazon, but I bought it there nonetheless. Why? Because Amazon already has my CC info, and I trust them to actually deliver the product and keep my information secure. The other sites may be (in fact, probably are) trustworthy, but I don't know that. I have no idea how well they're securing my card information. I have no idea if they're even going to deliver the part in a timely manner. Amazon wound up getting my money, because saving two bucks just wasn't worth the risk and extra transaction friction. Same thing with the app stores. The dev is providing the software, and Apple is providing the infrastructure and the reputation. Is 30% too high for that? Maybe, maybe not. For an unknown dev, it may well be. If you're a well-known company with an established reputation, maybe it isn't. I've noticed that a lot of the big names (e.g., Bare Bones Software) have exited the app store of late.
- pythonaut_16 9y ago
  Really though, having seen the vulnerabilities that have been found in many companies' websites, and their responses to them, I'm not so sure how trustworthy we can assume them to be. I prefer to use Amazon or Paypal as payment options on those sites whenever possible

BlackFly 9y ago

Actually, the quote you highlight is where I started to take umbrage with the blog. I'm willing to listen a person's opinion on what is ideal or fair, but here the author asserts an empirical fact without evidence. The evidence that I have actually heard[0] from valve indicates the opposite: that total revenue is unchanged by price. I am willing to believe that it can vary from product to product, but I am not willing to believe such an absolute assertion without any evidence. I agree with your point about 30%. 0: https://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell/ https://www.geekwire.com/2011/experiments-video-game-economi...

jeremy7600 9y ago
Did you skip this part of the article? "But then we did this different experiment where we did a sale. The sale is a highly promoted event that has ancillary media like comic books and movies associated with it. We do a 75 percent price reduction, our Counter-Strike experience tells us that our gross revenue would remain constant. Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40. Which is completely not predicted by our previous experience with silent price variation." and then: "Twenty-five percent, 50 percent and 75 percent very reliably generate different increases in gross revenue."