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I'm sorry, it's not clear to me why you're "ecstatic". Are you thinking that your SaaS strategy won't work without the Apple tax? Second, a lot of people have

I'm sorry, it's not clear to me why you're "ecstatic". Are you thinking that your SaaS strategy won't work without the Apple tax? Second, a lot of people have pointed out that taking 30% of ALL subscription revenue just sounds unconscionable. Computers/Internet were supposed to reduce friction in commerce, not add a 30% tax. It seems to me that you're OK leaving a huge amount of your fruit of your labour on the table. I hope there aren't too many people like you. Many won't be "ecstatic" at this offer. And for the record, I think Amazon terms are just as bad, if not worse.

steven_h 16y ago
He is ecstatic because his app netted him $3/user with apple taking 30%. Now that his app is free he will make $.70/month/user. Apple was taking 30% of his profits before but has given him a way to make more money per user long term. @nika, the reason you should not be ecstatic is because while apple did help connect your customers to your product they did nothing to ensure that people continue to use and pay for your product. You did all that work and you should feel entitled to your money.
- nika 16y ago
  People continuing to use my product are now a source of profit, that's why I'm ecstatic. One of the things we've done, for various reasons, is to not spend any money or effort on ongoing marketing or advertising. We run experiments to see if we can find customers cost effectively, but so far none of them have worked. Therefore, literally, everybody using our product came to it because Apple connected us. Apple does do marketing for quality apps on the appstore. I'm not talking about "Featured apps" and he "Design awards" and all, that but cross selling via genius, etc.
nika 16y ago
There is no mechanism currently on the AppStore for doing a SaaS strategy for Apps. In app purchase is set up for one time purchases, not for recurring subscriptions. This is a brand new feature, and it dovetails right in with the SaaS business model. Apple doesn't take %30 of "ALL subscription revenue" though people seem to keep saying this because it plays into the "apple is taxing us arbitrarily" meme. IF I wanted to, I could set up a webpage with paypal, and charge people directly, and save %30, minus paypals fees. However, paypal has proven itself to not be a trustworthy company in the past so there's an additional cost there, but that involves a lot of setting up servers, dealing with customers, etc. There really is a lot of effort required to sell things directly to the customer, there are liability issues, and if I were to outsource all that work I'd be buying several services that ultimately would take around the same total cut.... and I'd be more stressed on top of that. All that stress and time is energy that would be better spent on additional features or products. In fact, it would produce much higher returns because it is more highly leveraged. The effort that requires on the current app is just maintaining the status quo (I think there are zero customers who would rather pay by paypal than iTunes). I find it interesting that you say I'm leaving "a huge amount of the fruit of [my] labor on the table", as Apple is freeing up a huge amount of time and energy to improve the app or do new products. Look at the alternatives- I could give the app away free on android and let google advertise on it. How much would I be giving up in "google tax?" %60. And they only revealed that it was %60 after Apple made it public that they give developers %70. Who knows what it has been for the past decade before google had to be public about it. Plus, I know how many copies of my app are sold, I don't know how many clicks google disallows. Sure there are competing models, or I could do paypal with an android app (this would at least have the advantage of selling into all the countries paypal supports but not google checkout.) but again, that is time I have better use for. OR Amazon which will make me give up price control and possibly %80 of my revenue. These terms are not "just as bad" they are far far worse. And finally, before this, I was paying %30 on the initial sale in the Appstore. Nobody seemed to be complaining when Apple originally introduced that model-- and for good reason-- before that Carriers controlled app sales on phones and were much worse than publishers, taking %90 in many cases. Apple has greatly reduced the friction, and has added a new feature that lets me offer a better, more profitable model while simultaneously capturing many more customers. It's a no brainer.
- anonymous246 16y ago
  You make some decent points. But will you concede that prohibiting differential pricing, thereby preventing sellers from passing along the HUGE Apple tax, is anti-competitive wrt other lowest-cost payment services, and raises prices for consumers? I understand this is orthogonal to your initial post about your ecstasy. E.g., what do you think about Amazon simple pay; they are as/more trustworthy than Apple and far cheaper. https://payments.amazon.com/sdui/sdui/business/asp/subscriptions#pricing https://payments.amazon.com/sdui/sdui/business/asp/subscript... Just to be clear, I think charging 30% for initial app download is outrageous for a glorified download.com.
- minalecs 16y ago
  "ot of effort required to sell things directly to the customer" I think its a misconception that having an app on the app store is automatic success. The difference is that if you app doesn't go viral (or apple never puts your product in a curated list) on the app store, then what other channels do you have. Selling things directly for a lot of apps also has to be done as well or figuring out different marketing strategies and to me this is no different than selling directly to the customer.

steven_h 16y ago

He is ecstatic because his app netted him $3/user with apple taking 30%. Now that his app is free he will make $.70/month/user. Apple was taking 30% of his profits before but has given him a way to make more money per user long term. @nika, the reason you should not be ecstatic is because while apple did help connect your customers to your product they did nothing to ensure that people continue to use and pay for your product. You did all that work and you should feel entitled to your money.

nika 16y ago
People continuing to use my product are now a source of profit, that's why I'm ecstatic. One of the things we've done, for various reasons, is to not spend any money or effort on ongoing marketing or advertising. We run experiments to see if we can find customers cost effectively, but so far none of them have worked. Therefore, literally, everybody using our product came to it because Apple connected us. Apple does do marketing for quality apps on the appstore. I'm not talking about "Featured apps" and he "Design awards" and all, that but cross selling via genius, etc.

nika 16y ago

There is no mechanism currently on the AppStore for doing a SaaS strategy for Apps. In app purchase is set up for one time purchases, not for recurring subscriptions. This is a brand new feature, and it dovetails right in with the SaaS business model. Apple doesn't take %30 of "ALL subscription revenue" though people seem to keep saying this because it plays into the "apple is taxing us arbitrarily" meme. IF I wanted to, I could set up a webpage with paypal, and charge people directly, and save %30, minus paypals fees. However, paypal has proven itself to not be a trustworthy company in the past so there's an additional cost there, but that involves a lot of setting up servers, dealing with customers, etc. There really is a lot of effort required to sell things directly to the customer, there are liability issues, and if I were to outsource all that work I'd be buying several services that ultimately would take around the same total cut.... and I'd be more stressed on top of that. All that stress and time is energy that would be better spent on additional features or products. In fact, it would produce much higher returns because it is more highly leveraged. The effort that requires on the current app is just maintaining the status quo (I think there are zero customers who would rather pay by paypal than iTunes). I find it interesting that you say I'm leaving "a huge amount of the fruit of [my] labor on the table", as Apple is freeing up a huge amount of time and energy to improve the app or do new products. Look at the alternatives- I could give the app away free on android and let google advertise on it. How much would I be giving up in "google tax?" %60. And they only revealed that it was %60 after Apple made it public that they give developers %70. Who knows what it has been for the past decade before google had to be public about it. Plus, I know how many copies of my app are sold, I don't know how many clicks google disallows. Sure there are competing models, or I could do paypal with an android app (this would at least have the advantage of selling into all the countries paypal supports but not google checkout.) but again, that is time I have better use for. OR Amazon which will make me give up price control and possibly %80 of my revenue. These terms are not "just as bad" they are far far worse. And finally, before this, I was paying %30 on the initial sale in the Appstore. Nobody seemed to be complaining when Apple originally introduced that model-- and for good reason-- before that Carriers controlled app sales on phones and were much worse than publishers, taking %90 in many cases. Apple has greatly reduced the friction, and has added a new feature that lets me offer a better, more profitable model while simultaneously capturing many more customers. It's a no brainer.

anonymous246 16y ago
You make some decent points. But will you concede that prohibiting differential pricing, thereby preventing sellers from passing along the HUGE Apple tax, is anti-competitive wrt other lowest-cost payment services, and raises prices for consumers? I understand this is orthogonal to your initial post about your ecstasy. E.g., what do you think about Amazon simple pay; they are as/more trustworthy than Apple and far cheaper. https://payments.amazon.com/sdui/sdui/business/asp/subscriptions#pricing https://payments.amazon.com/sdui/sdui/business/asp/subscript... Just to be clear, I think charging 30% for initial app download is outrageous for a glorified download.com.
minalecs 16y ago
"ot of effort required to sell things directly to the customer" I think its a misconception that having an app on the app store is automatic success. The difference is that if you app doesn't go viral (or apple never puts your product in a curated list) on the app store, then what other channels do you have. Selling things directly for a lot of apps also has to be done as well or figuring out different marketing strategies and to me this is no different than selling directly to the customer.