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I don't understand why so many people think that if Apple didn't take a percentage cut of sales, prices would go down. Products are typically priced at what cus

I don't understand why so many people think that if Apple didn't take a percentage cut of sales, prices would go down. Products are typically priced at what customers are willing to pay, which likely wouldn't change. The developer would simply earn more. The only real benefit to customers might be the existence of some apps with extremely thin margins that wouldn't be viable otherwise. As a developer, I naturally approve this though.

gostsamo 2y ago
Because there are price sensitive users and many services would prefer to share those 30% with them instead of losing the business. Because even if the developer gets the money, they will invest them in their product instead of them going to Apple. Because even if they don't invest them, more money on the market will incentivize more developers who will create competition. Because even nothing changes, this means more money around the world instead of being concentrated in the Apple shareholders who will use them to create even more locked gardens.
- kingsleyopara 2y ago
  Thanks for the thoughtful reply. If a product is already priced optimally, lowering the price to capture price-sensitive users would reduce overall revenue, right? Profitable developers set prices based on what the market will bear, not the cost structure. Also, I'm not sure all developers would reinvest additional earnings into their products rather than just increase profit margins or divert funds elsewhere. I agree on the economic redistribution point though.
  - gostsamo 2y ago
    The current optimal price is set with the extra cost of Apple rentiering included on the production side. Minus that cost, the developer might find another optimum.
  - rrrrrrrrrrrryan 2y ago
    > I'm not sure all developers would reinvest additional earnings into their products rather than just increase profit margins or divert funds elsewhere A mega corporation like Apple is much less likely to do this than a smaller company, though. Apple's quarterly dividend is literally the company communicating that they make so much money they can't think of anything better to do with it than just giving it away to the investors.
  - lopis 2y ago
    Companies would sure not reduce the price by 30%, but perhaps 10%. This would mean their revenue increases, and the price conscious user saves money as well. I doubt any users would opt for not using the apple store if the price wasn't significantly lower.
  - rodonn 2y ago
    The profit maximizing price after a 30% cut `q(price) * (price - 30%price)` is not the same as the profit maximizing price without that cut `q(price) price`. As long as the demand curve is downward sloping, there will be some pass through of Apple's cut to customers, though the fraction that is passed through will depend on price elasticity.
- m3kw9 2y ago
  You pay Apple because they provide infrastructure to which you distribute your apps. Is like taxes so your country provide infrastructure etc, it may not be 100% efficient use but these things aren’t free
rrrrrrrrrrrryan 2y ago
Presumably the quality of the apps would get a bit better as well. If you've got 10 overworked employees and you suddenly make 10-30% more money, you can hire another one or two people and the business runs better.
kllrnohj 2y ago
> I don't understand why so many people think that if Apple didn't take a percentage cut of sales, prices would go down. Products are typically priced at what customers are willing to pay, which likely wouldn't change. You can trivially find countless counter examples where prices are higher only on the app store like netflix[1], spotify, etc.. subscriptions. They don't make their web & Android users pay more just to cover for iOS users, why would they? That makes no sense. So of course the price would drop if they were allowed to steer as they already sell it at the lower price on the website, they just aren't being allowed to tell iOS users that. And that is what Apple is getting hit for here. Not the 30% fee, but the rules forbidding developers from telling the user about alternative sign ups or purchasing locations. 1: well before Apple cut a special deal for Netflix anyway
lxgr 2y ago
> the existence of some apps with extremely thin margins that wouldn't be viable otherwise Isn't that great for me as a customer, though? And I wouldn't exactly call 30% + x an extremely thin margin!
freeAgent 2y ago
Competitive pricing doesn't work when you're in a monopoly/monopsony scenario, which is the case with Apple's App Store.

gostsamo 2y ago

Because there are price sensitive users and many services would prefer to share those 30% with them instead of losing the business. Because even if the developer gets the money, they will invest them in their product instead of them going to Apple. Because even if they don't invest them, more money on the market will incentivize more developers who will create competition. Because even nothing changes, this means more money around the world instead of being concentrated in the Apple shareholders who will use them to create even more locked gardens.

kingsleyopara 2y ago
Thanks for the thoughtful reply. If a product is already priced optimally, lowering the price to capture price-sensitive users would reduce overall revenue, right? Profitable developers set prices based on what the market will bear, not the cost structure. Also, I'm not sure all developers would reinvest additional earnings into their products rather than just increase profit margins or divert funds elsewhere. I agree on the economic redistribution point though.
- gostsamo 2y ago
  The current optimal price is set with the extra cost of Apple rentiering included on the production side. Minus that cost, the developer might find another optimum.
- rrrrrrrrrrrryan 2y ago
  > I'm not sure all developers would reinvest additional earnings into their products rather than just increase profit margins or divert funds elsewhere A mega corporation like Apple is much less likely to do this than a smaller company, though. Apple's quarterly dividend is literally the company communicating that they make so much money they can't think of anything better to do with it than just giving it away to the investors.
- lopis 2y ago
  Companies would sure not reduce the price by 30%, but perhaps 10%. This would mean their revenue increases, and the price conscious user saves money as well. I doubt any users would opt for not using the apple store if the price wasn't significantly lower.
- rodonn 2y ago
  The profit maximizing price after a 30% cut `q(price) * (price - 30%price)` is not the same as the profit maximizing price without that cut `q(price) price`. As long as the demand curve is downward sloping, there will be some pass through of Apple's cut to customers, though the fraction that is passed through will depend on price elasticity.
m3kw9 2y ago
You pay Apple because they provide infrastructure to which you distribute your apps. Is like taxes so your country provide infrastructure etc, it may not be 100% efficient use but these things aren’t free

rrrrrrrrrrrryan 2y ago

Presumably the quality of the apps would get a bit better as well. If you've got 10 overworked employees and you suddenly make 10-30% more money, you can hire another one or two people and the business runs better.

kllrnohj 2y ago

> I don't understand why so many people think that if Apple didn't take a percentage cut of sales, prices would go down. Products are typically priced at what customers are willing to pay, which likely wouldn't change. You can trivially find countless counter examples where prices are higher only on the app store like netflix[1], spotify, etc.. subscriptions. They don't make their web & Android users pay more just to cover for iOS users, why would they? That makes no sense. So of course the price would drop if they were allowed to steer as they already sell it at the lower price on the website, they just aren't being allowed to tell iOS users that. And that is what Apple is getting hit for here. Not the 30% fee, but the rules forbidding developers from telling the user about alternative sign ups or purchasing locations. 1: well before Apple cut a special deal for Netflix anyway

lxgr 2y ago

> the existence of some apps with extremely thin margins that wouldn't be viable otherwise Isn't that great for me as a customer, though? And I wouldn't exactly call 30% + x an extremely thin margin!

freeAgent 2y ago

Competitive pricing doesn't work when you're in a monopoly/monopsony scenario, which is the case with Apple's App Store.