6 ms·
30% is extremely high by any reasonable standard for any marketplace
by xoxoy 6y ago
30% is extremely high by any reasonable standard for any marketplace
- wmf 6y agoFWIW brick and mortar stores usually take 40%.
- dangoor 6y agoDoesn't seem a fair comparison given the far more substantial costs of brick and mortar. Brick and mortar retailers do not, traditionally, have very large margins when all is said and done, whereas I think the App Store has quite significant margins for Apple.
- valuearb 6y agoLast I looked, Apples gross services margins were around 66%, which implies a break even for the store at a 10% fee.
- Someone 6y agoI think Apples service margins include an unspecified amount from Google for being the default search engine on iOS. And that’s a big fraction of their services. https://www.thestreet.com/investing/google-pays-apple-billions-to-be-default-search-engine-14865683 https://www.thestreet.com/investing/google-pays-apple-billio... estimates that at $9.48 billion over 2018.
- valuearb 6y agoThat implies that App Store margins are lower than I estimated, and it’s costs higher.
- edmundsauto 6y agoDumb question, but why is a vendor's cost a relevant input to evaluate fairness? Isn't a common theme around here to price based on value, not on cost?
- brentis 6y agoThe infrastructure cost is 100000x than that for the storage and network of one file. Downloadable is nominal outside of store. I had millions of downloads back in 2005 timeframe and we never even looked at file hosting cost.
- globalproctd 6y agoI used to work stock at a bunch of retail stores for a decade and could see what percentage the markup was. It was almost never above 20%, and usually closer to 3-5%.
- xoxoy 6y agonot sure what the brick and mortar equivalent is. what does that mean? retailers pay suppliers some wholesale cost for their goods. doesn’t seem like an analogous situation to a marketplace that takes a fixed cut of every sale.
- meheleventyone 6y agoIn the olden days of game stores shelf space was at a premium so the power dynamic was on the side of the retailer, particularly with the larger chains who had a lot of room to negotiate their cut rather than buying wholesale.
- wmf 6y agoIf the wholesale cost is too close to MSRP, retailers will generally either refuse to carry the product or sell it above MSRP.
- josephcsible 6y agoBrick-and-mortar stores provide useful services and have high costs. Neither applies to the Apple App Store in this case.
- thewebcount 6y agoBack when CompUSA/Circuit City were where most people bought software, it was more like 50-60%.
- molszanski 6y agoDoesn't like every online "platform" take 30% cut? Google play, playstation store, steam, xbox store, nintendo store?
- ryneandal 6y agoEpic Games Store is 12%: https://www.polygon.com/2018/12/4/18125498/epic-games-store-details-revenue-split-launch-date https://www.polygon.com/2018/12/4/18125498/epic-games-store-...
- xoxoy 6y agobad argument since Apple set the precedent and everyone else followed.
- kllrnohj 6y agoSteam changed a while back: https://www.theverge.com/2018/11/30/18120577/valve-steam-game-marketplace-revenue-split-new-rules-competition https://www.theverge.com/2018/11/30/18120577/valve-steam-gam... It's now 30% for the first $10 million, 25% for $10-$50 million, and 20% thereafter. Also relevant here would be Epic Games Store, which is 12%. Also relevant here, is payment processors are way, way less than 30%, which is all that's used/needed for in-app purchases.
- valuearb 6y agoPaynent processors are entirely irrelevant to this discussion, given app stores do far more than just payment processing. Given publicly reported financials for Apples services gross margins imply a break even around 10%, I doubt any successful App Store offering similar services could survive on less than 15%.
- pjmlp 6y agoOn the contrary, it is quite low versus what previous app stores for J2ME, Symbian, ringtones used to charge for.
- metric10 6y agoIt’s so strange to me that after all this time they’re sticking with the high fee. The App Store is a major feature of the iOS platform and Apple benefits greatly from a healthy app ecosystem and user lock in. I would argue the 30% fee may not be a net gain for Apple.