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Why is Apple's revenue here even percentage-based at all? It makes zero sense. According to Apple they need this revenue cut because of the cost of keeping th

Why is Apple's revenue here even percentage-based at all? It makes zero sense. According to Apple they need this revenue cut because of the cost of keeping the platform running. If I offer a subscription in my app for 1$/month vs 10$/month what marginal expense is being incurred that apple deserves an extra $2.70 for the higher price?

detaro 6y ago
Do you price your subscriptions purely by the marginal expense of serving the content/service to another customer? Or do you price them according to what the market will pay for your product?
- sukilot 6y ago
  Totally different. The goal here is to maximize my profit and minimize my expenses.
  - detaro 6y ago
    Then don't be surprised that Apple works to maximize their profits too. Which neatly answers the question why Apple does pricing like that.
  - TulliusCicero 6y ago
    Do you think that isn't the goal for Apple?
  - thrwyoilarticle 6y ago
    It's not different, both are price discrimination. If they cut the price for the expensive products' apps, they'll have to raise it for the inexpensive products' apps. If the inexpensive products can't afford it, they won't have an app.
jedberg 6y ago
This is my big problem with it too. The cost of maintaining the app store and the search is the same no matter what the app is. It should be a fixed fee. On the other hand the argument is that all the $0 apps are being subsidized by the paid apps, so they went percentage based so that the cheap apps didn't have a huge fee. It would mean the cheapest paid apps in the app store would be a lot more to absorb the fixed cost, or if they shared it evenly, then there would be no free apps.
- Drew_ 6y ago
  You still have to pay $100-$300 to publish a completely free app.
  - csours 6y ago
    But not per user.
- realtalk_sp 6y ago
  Apple's cost to maintain this ecosystem can't be anything close to the insane $50B in App Store revenue they hauled in last year.
  - jedberg 6y ago
    I'm well aware it isn't close to what they make, but they are entitled to their profits too.
    - realtalk_sp 6y ago
      I think the overarching point that's emerging here is that those profits are a consequence of monopolistic rent-seeking...
    - acituan 6y ago
      And users are entitled to better app stores. In other words, users are entitled to chose between businesses according to their abilities in utilizing their profits to deliver more value. If there were competing app stores available on iOS, then we could say they are really entitled to that profit. But we don't know how much of this profit reflects the value they brought versus the rent they were able to get due to gatekeeping the only bridge into iOS-land. So no, we can't for sure say they are entitled to the entirety of that profit.
iainmerrick 6y ago
I assume it’s percentage-based to allow for free apps (which are an important part of the overall ecosystem). How do you allow free apps but still collect money? Maybe you could make a distinction between free and paid apps, and charge a flat fee to the paid apps, but then people would just make their apps free and process their payments separately anyway; essentially the same problem you hit with the 30% fee.
jpttsn 6y ago
You’ve seen through it, congrats: they are pricing based on value, not cost. McDonalds, Nike and Gillette do this too. Hey, maybe you’re doing it yourself: is your salary really the cheapest way for you to produce the work you get paid for?
- deleted 6y ago
  [deleted]
hejja 6y ago
this is a salient point, fixed rate would make much more sense

detaro 6y ago

Do you price your subscriptions purely by the marginal expense of serving the content/service to another customer? Or do you price them according to what the market will pay for your product?

sukilot 6y ago
Totally different. The goal here is to maximize my profit and minimize my expenses.
- detaro 6y ago
  Then don't be surprised that Apple works to maximize their profits too. Which neatly answers the question why Apple does pricing like that.
- TulliusCicero 6y ago
  Do you think that isn't the goal for Apple?
- thrwyoilarticle 6y ago
  It's not different, both are price discrimination. If they cut the price for the expensive products' apps, they'll have to raise it for the inexpensive products' apps. If the inexpensive products can't afford it, they won't have an app.

jedberg 6y ago

This is my big problem with it too. The cost of maintaining the app store and the search is the same no matter what the app is. It should be a fixed fee. On the other hand the argument is that all the $0 apps are being subsidized by the paid apps, so they went percentage based so that the cheap apps didn't have a huge fee. It would mean the cheapest paid apps in the app store would be a lot more to absorb the fixed cost, or if they shared it evenly, then there would be no free apps.

Drew_ 6y ago
You still have to pay $100-$300 to publish a completely free app.
- csours 6y ago
  But not per user.
realtalk_sp 6y ago
Apple's cost to maintain this ecosystem can't be anything close to the insane $50B in App Store revenue they hauled in last year.
- jedberg 6y ago
  I'm well aware it isn't close to what they make, but they are entitled to their profits too.
  - realtalk_sp 6y ago
    I think the overarching point that's emerging here is that those profits are a consequence of monopolistic rent-seeking...
  - acituan 6y ago
    And users are entitled to better app stores. In other words, users are entitled to chose between businesses according to their abilities in utilizing their profits to deliver more value. If there were competing app stores available on iOS, then we could say they are really entitled to that profit. But we don't know how much of this profit reflects the value they brought versus the rent they were able to get due to gatekeeping the only bridge into iOS-land. So no, we can't for sure say they are entitled to the entirety of that profit.

iainmerrick 6y ago

I assume it’s percentage-based to allow for free apps (which are an important part of the overall ecosystem). How do you allow free apps but still collect money? Maybe you could make a distinction between free and paid apps, and charge a flat fee to the paid apps, but then people would just make their apps free and process their payments separately anyway; essentially the same problem you hit with the 30% fee.

jpttsn 6y ago

You’ve seen through it, congrats: they are pricing based on value, not cost. McDonalds, Nike and Gillette do this too. Hey, maybe you’re doing it yourself: is your salary really the cheapest way for you to produce the work you get paid for?

deleted 6y ago
[deleted]

hejja 6y ago

this is a salient point, fixed rate would make much more sense