Apple’s App Store profits on commissions from digital sales
Revenue $32 B
Operating Costs $7 B [1]
Estimated Profit $25 B
Operating Margin ~78%
[1] R&D, security, hosting, human review, and including building and maintaining developer tools Xcode, APIs, and SDKs.
Apple could take just 7% cut and still make 20% profits.
Fun Fact: During the Epic trial, it was revealed that Apple's profit margins on the App Store were so high that even Apple's own executives were sometimes surprised by the internal financial reports.
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edit: There is no ideological argument for voluntary action here. The entire goal is to force regulators to step in. The debate over 'good vs. bad companies' is just online noise and rhetorical trik, no one on either side of the political spectrum wants these systems to be fixed voluntarily with corporate altruism.
But what about my banking app! I think it’s only fair Apple take 30% on every transaction I make. After all they put in a huge amount of work validating and making sure my banking app is safe and functional.
Edit: Maybe I am greedy now, but it would be nice if large transactions like say buying a house only would cost me a 15% transaction fee to Apple.
You joke, but legally they could. If game engines can charge a licence fee as a % of revenue from games developed on those engines, then legally there's not much to stop apple doing the same. Of course consumers and enterprises wouldn't tolerate it, but the barrier is commercial rather than legal.
It made sense in the early days, phone operators were charging up to 90% for the infrastucture to send an SMS, and get a download link to a J2ME/Windows CE/Pocket PC/Symbian/Palm/Blackberry download link to install the app.
So everyone raced to the iOS app store, it was only 30%, what a great deal!
The problem is that two decades later it is no longer that great deal in mobile duopoly world.
Isn't it strictly worse that they're already thinking they're entitled to 30% of your salary because your clients use Apple hardware? You can change what you use, you can't change what they use.
All the regulators in the world have their sights set on them and they know it. The light is half on already and the music is slowing. This party is soon to be over. It's a last ditch attempt at milking all they can.
Stuff like this is ironic but I do think it's escape hatches like this that will make these tech companies, if they ever go down, go down kicking and screaming. Any platform holder that ever finds themselves in a bad place financially will 100% pull all the levers like this.
30% of profit from stock sales initiated on Apple hardware should automatically go to Apple. Because why not. It's a digital sale, there is no physical goods changing hands. Sounds perfectly reasonable to me. /s
The wealthiest company in the world really needs that last little bit from those Patreon creators who have it way too easy in their lives. It's not as if the people that take that meager bit of cash are going to invest it in Apple stock so they're going to have to pay up.
2035: Apple takes 30% of my Patreon, Google matched it through their "Competitive Parity Agreement," and the EU fined them both €2 billion which they paid in 45 minutes of revenue then raised fees to 32% to cover legal costs.
The real innovation was convincing us this was inevitable.
Sometimes I think the 30% was supposed to be 3% originally, and no one noticed the decimal was in the wrong place when they shipped it, and then people paid it anyway, so they kept it.
30% is just so unreasonable that it would be totally understandable if someone would believe this.
In 2008, the app store was launching, and physical software was still sold at Targets, Walmarts and other large retailers. A 30% margin was roughly what retailers would make off of physical software sales. By setting the App Store to be the same, Apple was signaling to retailers that they were not trying to undercut their margin, and keep a healthy relationship with them.
Steam, the Kindle Store and iTunes all had similar sales cuts since before the app store launched in 2008.
It’s egregious now but at the time it wasn’t crazy because software developers often made way less than that when going through traditional publishing routes. Plus everyone was just happy to be making money off the new platform.
You can be the patron of a creator and Apple in the same time! Jokes aside, this is awful...I like/use Apple products but this unacceptable, I hope everyone dodges this and pays through the website
In all seriousness, finance people see everything through the lens of margins and money primarily. Since any company's function is to deliver value to its shareholders, if allowed, bean counters will scorch the earth for it.
Ultimately, this is at odds on how Jobs approached things, i.e., money was not the end all be all.
I still can't believe developers love to work for this feudal overlord. They are building a wall around our profession. Have a little foresight and move your business elsewhere.
It's not so much that I love giving 30% to Apple, and more that there is no way to move your business elsewhere because Apple monopolizes mobile app distribution.
And the other half of the mobile app market is monopolized by Google who copies the pricing model while delivering even worse (if any) service to developers.
It's either getting out of mobile apps or paying up.
This is not going to change without drastic steps by regulators, which both Apple and Google fight tooth and nail.
I actually love Apple for pushing this matter this hard and sticking to its guns. This will bring in more regulatory scrutiny not just in the U.S. but in other countries as well. That will force Apple to give up (maybe in a decade or so) this practice of arbitrary rules and squeezing the last penny from others.
Thanks a lot, Eddy Cue, for all that you do to bring Apple down to its knees!
Just do what we all do to dodge this, have the Account management and purchasing abilities sit inside an embedded browser window that opens up from a button push in the app. Yes it adds a little barrier but with Apple Pay it is a very small barrier and the juice is worth the squeeze.
I don't get it. Apple is the top 3 most valuable companies in the WORLD. THE WORLD. They act like a greedy friend that would ask you to pay back $1.54 for a meal of $1500, because you ordered a side of fries which they did not eat.
Aren't they making the majority of their money from selling hardware and iCloud subscriptions? Why they go on and milk developers, who make apps FOR THEIR ECOSYSTEM?!
Interestingly, Patreon doesn't give creators an option of "Just don't accept donations for us from Apple users" instead, which is what my old project (SQLite Browser / DB Browser for SQLite) would have gone with if available. :(
I've instead handed the reins to others, so I don't have skin in this game any more. ;)
Patiently waiting for a mandatory 30% fee on every transaction made with iOS banking software. Maybe that'll put a definitive stop to forcing mobile "apps" with jailbreak detection on customers and have banks think twice before crippling the functionality of their websites.
This means Apple is literally going to take nearly 3x in fees from Patreon's customers than Patreon is taking from their own customers.
My understanding is that the reason the number 30% is so magical is a historical anomaly. When software was physically distributed back in the day, 15% of the MSRP was reserved for the distributor and another 15% for the retailer. When these digital marketplaces were set up, the companies just said "well, we're the distributor and the retailer, so we'll keep both". Forgetting the fact that the cost to distribute and retail the software is literally pennies on the dollar of what it used to be.
I think the irony in this case is that this is a greed problem of their own making. When Steve Jobs announced that apps on the original iPhone would only be $1-$3, he set off the first enshittification crisis in the software industry. In 2008, Bejeweled cost $19.99 if you wanted to buy it on the PC. On the iPhone it was $0.99! This artificially low anchor price is what kicked off the adoption of ad and subscription driven software models in the first place.
Question for the indie developers here; do you get more paying users from Apple devices?
I’ve never even considered publishing apps for other platforms as my gut tells me juice wouldn’t be worth the squeeze. Or to put it another way, I would prefer customers who already proved they have deep(er) pockets and are price insensitive.
The amount of people defending this because it's apple in here is astounding. This is possibly the least consumer friendly thing apple has done in a while, and that's saying something.
[+] [-] nabla9|1 month ago|reply
Apple could take just 7% cut and still make 20% profits.
Fun Fact: During the Epic trial, it was revealed that Apple's profit margins on the App Store were so high that even Apple's own executives were sometimes surprised by the internal financial reports.
---
edit: There is no ideological argument for voluntary action here. The entire goal is to force regulators to step in. The debate over 'good vs. bad companies' is just online noise and rhetorical trik, no one on either side of the political spectrum wants these systems to be fixed voluntarily with corporate altruism.
[+] [-] supernes|1 month ago|reply
[+] [-] plufz|1 month ago|reply
Edit: Maybe I am greedy now, but it would be nice if large transactions like say buying a house only would cost me a 15% transaction fee to Apple.
[+] [-] pavlov|1 month ago|reply
Wouldn’t be surprised if macOS starts locking down CLI tools towards an App Store model too.
[+] [-] lostlogin|1 month ago|reply
[+] [-] spacebanana7|1 month ago|reply
[+] [-] pjmlp|1 month ago|reply
So everyone raced to the iOS app store, it was only 30%, what a great deal!
The problem is that two decades later it is no longer that great deal in mobile duopoly world.
[+] [-] bsza|1 month ago|reply
[+] [-] account42|1 month ago|reply
[+] [-] StopDisinfo910|1 month ago|reply
[+] [-] kkukshtel|1 month ago|reply
[+] [-] SwtCyber|1 month ago|reply
[+] [-] anonzzzies|1 month ago|reply
[+] [-] m463|1 month ago|reply
[+] [-] gdevenyi|1 month ago|reply
[+] [-] unknown|1 month ago|reply
[deleted]
[+] [-] amelius|1 month ago|reply
[+] [-] robshippr|1 month ago|reply
[+] [-] jsheard|1 month ago|reply
[+] [-] g947o|1 month ago|reply
[+] [-] jacquesm|1 month ago|reply
The Mafia can learn a thing or two from Cook.
[+] [-] siavosh|1 month ago|reply
[+] [-] haritha-j|1 month ago|reply
[+] [-] dzonga|1 month ago|reply
Both employ mafia tactics
[+] [-] cong-or|1 month ago|reply
The real innovation was convincing us this was inevitable.
[+] [-] Rygian|1 month ago|reply
Reality disagrees: https://www.irishtimes.com/business/2024/12/13/data-regulato...
[+] [-] davidmurdoch|1 month ago|reply
30% is just so unreasonable that it would be totally understandable if someone would believe this.
[+] [-] trimbo|1 month ago|reply
[+] [-] derekdahmer|1 month ago|reply
It’s egregious now but at the time it wasn’t crazy because software developers often made way less than that when going through traditional publishing routes. Plus everyone was just happy to be making money off the new platform.
[+] [-] aquir|1 month ago|reply
[+] [-] sinnsro|1 month ago|reply
In all seriousness, finance people see everything through the lens of margins and money primarily. Since any company's function is to deliver value to its shareholders, if allowed, bean counters will scorch the earth for it.
Ultimately, this is at odds on how Jobs approached things, i.e., money was not the end all be all.
[+] [-] NewJazz|1 month ago|reply
[+] [-] mhitza|1 month ago|reply
[+] [-] amelius|1 month ago|reply
[+] [-] user34283|1 month ago|reply
And the other half of the mobile app market is monopolized by Google who copies the pricing model while delivering even worse (if any) service to developers.
It's either getting out of mobile apps or paying up.
This is not going to change without drastic steps by regulators, which both Apple and Google fight tooth and nail.
[+] [-] bluescrn|1 month ago|reply
Why did we let mobile go down the one-app-per-website path?
[+] [-] AnonC|1 month ago|reply
Thanks a lot, Eddy Cue, for all that you do to bring Apple down to its knees!
[+] [-] sethops1|1 month ago|reply
[+] [-] hrldcpr|1 month ago|reply
[+] [-] cadamsdotcom|1 month ago|reply
[+] [-] dankwizard|1 month ago|reply
[+] [-] fnoef|1 month ago|reply
Aren't they making the majority of their money from selling hardware and iCloud subscriptions? Why they go on and milk developers, who make apps FOR THEIR ECOSYSTEM?!
[+] [-] justinclift|1 month ago|reply
I've instead handed the reins to others, so I don't have skin in this game any more. ;)
[+] [-] m132|1 month ago|reply
Please Apple, make this happen.
[+] [-] mark_l_watson|1 month ago|reply
He talks about Apple's app store
[+] [-] conartist6|1 month ago|reply
I feel like I've just watched a man in a $4000 suit wresting the change jar out of the hands of a homeless person
[+] [-] legitster|1 month ago|reply
My understanding is that the reason the number 30% is so magical is a historical anomaly. When software was physically distributed back in the day, 15% of the MSRP was reserved for the distributor and another 15% for the retailer. When these digital marketplaces were set up, the companies just said "well, we're the distributor and the retailer, so we'll keep both". Forgetting the fact that the cost to distribute and retail the software is literally pennies on the dollar of what it used to be.
I think the irony in this case is that this is a greed problem of their own making. When Steve Jobs announced that apps on the original iPhone would only be $1-$3, he set off the first enshittification crisis in the software industry. In 2008, Bejeweled cost $19.99 if you wanted to buy it on the PC. On the iPhone it was $0.99! This artificially low anchor price is what kicked off the adoption of ad and subscription driven software models in the first place.
[+] [-] hiprob|1 month ago|reply
[+] [-] rahilb|1 month ago|reply
I’ve never even considered publishing apps for other platforms as my gut tells me juice wouldn’t be worth the squeeze. Or to put it another way, I would prefer customers who already proved they have deep(er) pockets and are price insensitive.
[+] [-] idiotsecant|1 month ago|reply