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"App Store fees got you down? Meanwhile at Epic, they lowered their take on the Unreal Marketplace from 30% to 12% and retroactively paid back years of fees. "

"App Store fees got you down? Meanwhile at Epic, they lowered their take on the Unreal Marketplace from 30% to 12% and retroactively paid back years of fees. "Epic said this is due to the success of Fortnite. If only Apple and Google had successful products to rely on for income." — https://twitter.com/agilethumbs/status/1029804861477412865 https://twitter.com/agilethumbs/status/1029804861477412865

WilliamEdward 8y ago
I really like that. I think the first thing people should do when making a startup is finding a consistent revenue stream and business model. Most companies are actually more about the model than the idea. Hell, even Nike only makes about 6% of profit on their $100 shoes. They can do this because they have a consistent and reliable business model (aka not advertisement income). It's not even the shoes anymore. it's the idea of the shoes.
- scarface74 8y ago
  Just to provide a reference on the $6/Nike shoes, because I didn't believe it.... https://solecollector.com/news/2014/12/how-much-it-costs-nike-to-make-a-100-shoe https://solecollector.com/news/2014/12/how-much-it-costs-nik...
  - WilliamEdward 8y ago
    Thank you for that. I believe the source i read included marketing in the expenses, but that was long ago.
- fjsolwmv 8y ago
  6% profit after paying the salaries of everyone involved in manufacturing, marketing, and administration, including retailer profit, is quite a lot.
  - WilliamEdward 8y ago
    It's just less than people would think because all they get to see is the $100 price tag.
adrian_mrd 8y ago
Epic's is a useful reference point. The retrospective angle was particularly surprising, but also shows how successful Fortnite has been in terms of revenue.
muro 8y ago
EC told Google that income from PlayStore should be enough for them to make money on Android. Edit: EC == European Commission
- vram22 8y ago
  Who is EC in this context? The Epic mentioned above, or something else?
  - Camillo 8y ago
    Probably the European Commission.
  - btian 8y ago
    European Commission I imagine
Bekwnn 8y ago
Additionally, Unreal Engine 4 charges only 5% gross on revenue exceeding 3,000 USD per quarter. Epic's CEO tweeted about these markets taking 30% where other transaction facilitators only take 2-5%. https://mobile.twitter.com/TimSweeneyEpic/status/898316545499201536 https://mobile.twitter.com/TimSweeneyEpic/status/89831654549... It feels like in tech there are a ton of leech-like companies attempting to leverage their way into middleman positions and then rest on their laurels while dictating terms to the supply side as they hold the customer side hostage. I'm not a fan of it, and I'm glad that in the past few years there seems to be a growing awareness of it. Tim Sweeney and Epic have been hugely supportive to other developers and I wish other companies tried to offer as much value and support to the developers that their business rests upon.
- valuearb 8y ago
  Calling Apple a transaction facilitator is a ludicrous way to try to downplay what they actually do. They aren’t just a transaction processer, that’s the cheapest and easiest part of their job. They also host petabytes of apps in hundreds of geographically dispersed and localized app stores, and covers all bandwidth for distributing and updating those apps. And unlike google Apple actually reviews every release of every app by hand, keeping huge amounts of malware off customer devices, and maintaining the high level of confidence developers need to get customers to buy apps. Now Apple doesn’t need 30%, but they’d lose huge amounts of money at 5%. A more reasonable guess at App Store break-even is that it requires at least 10%.
  - buboard 8y ago
    Apple made $11 billion from apps in 2017. I doubt they spent more than $1B on app distribution. You d have to add research costs to go up to 10%.
    - valuearb 8y ago
      I guarantee they spent more. The host over 2 million apps, in hundreds of geographic locations. With updates, they are distributing billions of releases and updates a year. And some of those apps exceed a gigabyte in size. Outside of raw bandwidth and storage costs, someone has to run those tens of thousands of servers across the world, and manage development of the distribution software. Then you need sales and marketing personnel to build and run the App Store, and hundreds of similar staffs to build and manage the hundreds of international stores in dozens of different languages. Then you need software development teams to build and maintain the - payment processing, including server infrastructure, the iOS, Mac SDKs, the APIs, etc - software distribution and updating infrastructure, from tools to manage thousands of servers, as well as track and report, and more Mac/iOS SDKs and sever APIs. - The App Store itself, with custom app pages, search, advertising, Mobil app versions, web versions, account management, support, etc. - App Submission infrastructure, including XCode, Swift, Automated App Analysis tools, Bitcode, the Bitcode server infrastructure, crash reporting, TestFlight test distributions and infrastructure, developer accounts including security profile generation/management, ItunesConnect account management including sales and legal reporting along with App distribution interface and controls. And then there is - Sales and marketing costs, advertising, developer co-marketing - Customer support And finally, developer support. Apple likely has at least a thousand people working in developer support, mostly on app submissions. And they are all in Cupertino, meaning Apple is spending well over $100M a year just on payroll costs for that department alone. $1B? I’d be surprised if it’s less than triple that. They likely spend close to half a billion on App Store/Developer advertising alone.

WilliamEdward 8y ago

I really like that. I think the first thing people should do when making a startup is finding a consistent revenue stream and business model. Most companies are actually more about the model than the idea. Hell, even Nike only makes about 6% of profit on their $100 shoes. They can do this because they have a consistent and reliable business model (aka not advertisement income). It's not even the shoes anymore. it's the idea of the shoes.

scarface74 8y ago
Just to provide a reference on the $6/Nike shoes, because I didn't believe it.... https://solecollector.com/news/2014/12/how-much-it-costs-nike-to-make-a-100-shoe https://solecollector.com/news/2014/12/how-much-it-costs-nik...
- WilliamEdward 8y ago
  Thank you for that. I believe the source i read included marketing in the expenses, but that was long ago.
fjsolwmv 8y ago
6% profit after paying the salaries of everyone involved in manufacturing, marketing, and administration, including retailer profit, is quite a lot.
- WilliamEdward 8y ago
  It's just less than people would think because all they get to see is the $100 price tag.

adrian_mrd 8y ago

Epic's is a useful reference point. The retrospective angle was particularly surprising, but also shows how successful Fortnite has been in terms of revenue.

muro 8y ago

EC told Google that income from PlayStore should be enough for them to make money on Android. Edit: EC == European Commission

vram22 8y ago
Who is EC in this context? The Epic mentioned above, or something else?
- Camillo 8y ago
  Probably the European Commission.
- btian 8y ago
  European Commission I imagine

Bekwnn 8y ago

Additionally, Unreal Engine 4 charges only 5% gross on revenue exceeding 3,000 USD per quarter. Epic's CEO tweeted about these markets taking 30% where other transaction facilitators only take 2-5%. https://mobile.twitter.com/TimSweeneyEpic/status/898316545499201536 https://mobile.twitter.com/TimSweeneyEpic/status/89831654549... It feels like in tech there are a ton of leech-like companies attempting to leverage their way into middleman positions and then rest on their laurels while dictating terms to the supply side as they hold the customer side hostage. I'm not a fan of it, and I'm glad that in the past few years there seems to be a growing awareness of it. Tim Sweeney and Epic have been hugely supportive to other developers and I wish other companies tried to offer as much value and support to the developers that their business rests upon.

valuearb 8y ago
Calling Apple a transaction facilitator is a ludicrous way to try to downplay what they actually do. They aren’t just a transaction processer, that’s the cheapest and easiest part of their job. They also host petabytes of apps in hundreds of geographically dispersed and localized app stores, and covers all bandwidth for distributing and updating those apps. And unlike google Apple actually reviews every release of every app by hand, keeping huge amounts of malware off customer devices, and maintaining the high level of confidence developers need to get customers to buy apps. Now Apple doesn’t need 30%, but they’d lose huge amounts of money at 5%. A more reasonable guess at App Store break-even is that it requires at least 10%.
- buboard 8y ago
  Apple made $11 billion from apps in 2017. I doubt they spent more than $1B on app distribution. You d have to add research costs to go up to 10%.
  - valuearb 8y ago
    I guarantee they spent more. The host over 2 million apps, in hundreds of geographic locations. With updates, they are distributing billions of releases and updates a year. And some of those apps exceed a gigabyte in size. Outside of raw bandwidth and storage costs, someone has to run those tens of thousands of servers across the world, and manage development of the distribution software. Then you need sales and marketing personnel to build and run the App Store, and hundreds of similar staffs to build and manage the hundreds of international stores in dozens of different languages. Then you need software development teams to build and maintain the - payment processing, including server infrastructure, the iOS, Mac SDKs, the APIs, etc - software distribution and updating infrastructure, from tools to manage thousands of servers, as well as track and report, and more Mac/iOS SDKs and sever APIs. - The App Store itself, with custom app pages, search, advertising, Mobil app versions, web versions, account management, support, etc. - App Submission infrastructure, including XCode, Swift, Automated App Analysis tools, Bitcode, the Bitcode server infrastructure, crash reporting, TestFlight test distributions and infrastructure, developer accounts including security profile generation/management, ItunesConnect account management including sales and legal reporting along with App distribution interface and controls. And then there is - Sales and marketing costs, advertising, developer co-marketing - Customer support And finally, developer support. Apple likely has at least a thousand people working in developer support, mostly on app submissions. And they are all in Cupertino, meaning Apple is spending well over $100M a year just on payroll costs for that department alone. $1B? I’d be surprised if it’s less than triple that. They likely spend close to half a billion on App Store/Developer advertising alone.