5 ms·

I don’t know about markups but in most industries businesses would envy a 10% profit margin.

by efitz 5y ago

vlovich123 5y ago
Finally found something [1]. > When setting your wholesale price, first multiply your cost of goods by two. This will ensure your wholesale profit margin is at least 50%. Profit margin is the gross profit a retailer earns when an item is sold. Apparel retail brands typically aim for a 30% to 50% wholesale profit margin, while direct-to-consumer retailers aim for a profit margin of 55% to 65%. (A margin is sometimes also referred to as “markup percentage.”) So 50% is about normal for retail goods. Yes yes. They have physical merchandise they need to manage. Apple has engineers they need to pay to do their virtual distribution. Maybe 30% is excessive. Certainly that they're the only store and hold a monopoly on the things they allow people to do on their platform is probably fueling that margin to be higher than it should. However, if we look at Steam[2] and other console manufacturers, we see similar 30% markups. Maybe everyone is just copying Apple's lead here as "customers will swallow this". Or maybe Apple figured out a good virtual store distribution model and this is the markup needed for a sustainable thriving business. [1] https://www.shopify.com/retail/product-pricing-for-wholesale-and-retail https://www.shopify.com/retail/product-pricing-for-wholesale... [2] https://www.ign.com/articles/2019/10/07/report-steams-30-cut-is-actually-the-industry-standard https://www.ign.com/articles/2019/10/07/report-steams-30-cut...
- olliej 5y ago
  The argument that 30% is excessive and a product of their monopoly is bullshit. 1) the majority of apps don’t pay apple a cent because they make their money off selling user information 2) of those that remain most likely aren’t reaching the income point where it stops being 15% 3) 30% matches the payments of every other store, except those stores that don’t pay for any of the platform development. It’s super easy to charge next to nothing when you don’t have to pay actual engineers to make actual products.
  - yywwbbn 5y ago
    Why do you think Apple still makes Macs? According to your argument it should be a net loss for them.
    - olliej 5y ago
      People often complain about the markup on Macs, so it seems reasonable to interpret that as a higher margin being used to compensate for the lack of ongoing revenue. Higher margins are the obvious (only?) alternative to ongoing commission revenue - that obviously puts Apple at a disadvantage compared to * Google, who makes money by harvesting information from every android user; or * Samsung, etc who don't pay the cost of developing a platform * Steam, GoG, etc who literally only operate a store front, yet still take 30% cuts. They don't even have significant proportion of free games - and the games that they do have are frequently > $50 so their per-sale absolute revenue is insane. * The various console platforms, because somehow consoles are magically different from everyone else * Microsoft (ignoring consoles) who charges for their OS, and despite that seems hell bent on putting ads into the OS
      - yywwbbn 5y ago
        Are margins on Macs higher than on iPhones? I’d assume at least with Intel they were lower than for iOS devices. Also basically all Apple’s direct competitors both in the PC and smartphone businesses operate on paltry margins in comparison to Apple. They usually sell a mix of low/high margin products though, e.g. most premium Dell or Lenovo laptops are priced at similar levels to Macbooks (of course their real price might significantly lower due to infinitely better customizability and reparability options). And almost none of them have significant additional revenue streams (not to a degree comparable to Apple). Yet they are still in business. Apple would be able not to only to survive but to still thrive if they significantly cut their margins and the app store tax. Of course it would not be fair or sensible to expect any company to leave free money on the table. This is why we get ads in Windows, seem like most users dont’t really mind them too much (to be fair I’m not sure I have actually seen one, maybe it’s a windows edition and/or country thing.
  - 5y ago
- bouke 5y ago
  Do note that the 30% cut is actually a 42% (30/70) markup.

I don’t know about markups but in most industries businesses would envy a 10% profit margin.

by efitz 5y ago

I don’t know about markups but in most industries businesses would envy a 10% profit margin.

Finally found something [1]. > When setting your wholesale price, first multiply your cost of goods by two. This will ensure your wholesale profit margin is at least 50%. Profit margin is the gross profit a retailer earns when an item is sold. Apparel retail brands typically aim for a 30% to 50% wholesale profit margin, while direct-to-consumer retailers aim for a profit margin of 55% to 65%. (A margin is sometimes also referred to as “markup percentage.”) So 50% is about normal for retail goods. Yes yes. They have physical merchandise they need to manage. Apple has engineers they need to pay to do their virtual distribution. Maybe 30% is excessive. Certainly that they're the only store and hold a monopoly on the things they allow people to do on their platform is probably fueling that margin to be higher than it should. However, if we look at Steam[2] and other console manufacturers, we see similar 30% markups. Maybe everyone is just copying Apple's lead here as "customers will swallow this". Or maybe Apple figured out a good virtual store distribution model and this is the markup needed for a sustainable thriving business. [1] https://www.shopify.com/retail/product-pricing-for-wholesale-and-retail https://www.shopify.com/retail/product-pricing-for-wholesale... [2] https://www.ign.com/articles/2019/10/07/report-steams-30-cut-is-actually-the-industry-standard https://www.ign.com/articles/2019/10/07/report-steams-30-cut...

olliej 5y ago
The argument that 30% is excessive and a product of their monopoly is bullshit. 1) the majority of apps don’t pay apple a cent because they make their money off selling user information 2) of those that remain most likely aren’t reaching the income point where it stops being 15% 3) 30% matches the payments of every other store, except those stores that don’t pay for any of the platform development. It’s super easy to charge next to nothing when you don’t have to pay actual engineers to make actual products.
- yywwbbn 5y ago
  Why do you think Apple still makes Macs? According to your argument it should be a net loss for them.
  - olliej 5y ago
    People often complain about the markup on Macs, so it seems reasonable to interpret that as a higher margin being used to compensate for the lack of ongoing revenue. Higher margins are the obvious (only?) alternative to ongoing commission revenue - that obviously puts Apple at a disadvantage compared to * Google, who makes money by harvesting information from every android user; or * Samsung, etc who don't pay the cost of developing a platform * Steam, GoG, etc who literally only operate a store front, yet still take 30% cuts. They don't even have significant proportion of free games - and the games that they do have are frequently > $50 so their per-sale absolute revenue is insane. * The various console platforms, because somehow consoles are magically different from everyone else * Microsoft (ignoring consoles) who charges for their OS, and despite that seems hell bent on putting ads into the OS
    - yywwbbn 5y ago
      Are margins on Macs higher than on iPhones? I’d assume at least with Intel they were lower than for iOS devices. Also basically all Apple’s direct competitors both in the PC and smartphone businesses operate on paltry margins in comparison to Apple. They usually sell a mix of low/high margin products though, e.g. most premium Dell or Lenovo laptops are priced at similar levels to Macbooks (of course their real price might significantly lower due to infinitely better customizability and reparability options). And almost none of them have significant additional revenue streams (not to a degree comparable to Apple). Yet they are still in business. Apple would be able not to only to survive but to still thrive if they significantly cut their margins and the app store tax. Of course it would not be fair or sensible to expect any company to leave free money on the table. This is why we get ads in Windows, seem like most users dont’t really mind them too much (to be fair I’m not sure I have actually seen one, maybe it’s a windows edition and/or country thing.
- 5y ago
bouke 5y ago
Do note that the 30% cut is actually a 42% (30/70) markup.