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In most of these discussions there's a question about the fairness of Apple's 30% cut. Are they charging too much? Most might just look at the cost of a credit
by robomartin 14y ago
In most of these discussions there's a question about the fairness of Apple's 30% cut. Are they charging too much?
Most might just look at the cost of a credit card transaction (~3%) and think that 30% is just crazy. That, of course, is the wrong way to look at it. The act of selling a product costs far more than the credit card processing fees. This is particularly true for physical products that you have to store and ship.
The best comparison I can make is to take a look at having Amazon sell your product. Here are the fees:
http://www.amazonservices.com/selling/pricing.htm http://www.amazonservices.com/selling/pricing.htm
In very rough strokes, fees range from about 5% to 50% of the transaction total, depending on the cost and nature of the items sold.
Clearly Apple could charge a lot less for higher valued items. Right? The flat 30% cut starts to become excessive at some point. If I understand Amazon's pricing for selling your software product the two services compare as follows (assuming no shipping, only downloads):
price Apple Amazon % of Amazon take
1.00 0.30 2.49 249%
5.00 1.50 3.09 62%
10.00 3.00 3.84 38%
15.00 4.50 4.59 31%
20.00 6.00 5.34 27%
25.00 7.50 6.09 24%
30.00 9.00 6.84 23%
35.00 10.50 7.59 22%
40.00 12.00 8.34 21%
45.00 13.50 9.09 20%
50.00 15.00 9.84 20%
75.00 22.50 13.59 18%
100.00 30.00 17.34 17%
In this possibly contrived comparison it'd cost about the same to sell your product through Amazon up to about $15 to $20. After that Amazon charges you less. For low price items Apple is ridiculously cheap.
Can you do better if you handle your own transactions, fulfillment, hosting, customer service, fraud/loss prevention, etc. Possibly. It certainly doesn't get down to the raw ~3% you pay for CC transactions. My guess is that a highly optimized operation might be able to achieve 5% to 25% depending on the nature of the product and sale price. Clearly selling items below about $10 requires a highly optimized operation with huge volume or your are going to loose your shirt --and more-- no matter how you approach it (keep that in mind when selling something for a buck on eBay).