Ask HN: I don't understand why app stores charge 30% of app sales

[santoshmaharshi]

30% of app sales is a huge comission, charging even more than real estate agents :). Is this percentage justified, what are your thoughts and has some one challenged these rates ?

[saurik]

The Apple App Store (which has been disclosed in earnings calls multiple years as only just barely in the black) handles your sales tax compliance for you (though the Google Play Store does not...), deals with refunds and complaints, isolates you from chargebacks (every customer that complains to their bank typically costs you an enforced $10-$20 per complaint in addition to the money), is handling your server distribution (fast bandwidth to send updates adds up for large applications that are updated often), provides licensing infrastructure (you don't need to build some kind of "enter your code" DRM system with a bunch of servers that have to be online: you just give your app to the market and wash your hands of the problem; this is also often much easier when a user trades his device in due to a hardware issue: that's the market's problem), and is usually subsidizing a large population of free software that also accumulates complaints and infrastructure costs (and it is that large catalog of free stuff that often is causing your customers to have this experience installed anyway)... I run an app market, we charge 30% and end up with a fraction of that; I've had people who were additionally doing their own payment processing (we run an open ecosystem, and these people were not losing the distribution benefits of my market) stop and transfer all their existing license records to me, because I was simply providing them a more solid and convenient payment experience: they got to concentrate on building their app, and the price difference between their true costs of running this and what I was better spent improving their product and marketing efforts. Comparing to a real estate agent is really off, by the way, because the costs of doing transactions in hundreds of thousands of dollars is fundamentally different than doing transactions on a $1. The "good rates" (so throwing companies like Stripe out the door, which would cost $0.33 upfront) are still going to run you 10% the transaction cost, and the chargeback on a $1000 purchase is still going to cost the same $10-$20.

[santoshmaharshi]

Many thanks Saurik. Makes sense.

[argonaut]

Originally Apply started out with 30%. Perhaps they thought at the time (remember, there were no apps then) that going higher would dissuade developers. Then other app stores (Google Play, etc.) entered and charged 30%. Now, even with entrenched positions, raising the percentage would probably be very negative PR / developer relations. Dropping the percentage doesn't really make sense because you'd just be entering a price war (competitor immediately drops percentage, you both lose).

[saurik]

Actually, they were pushing lower, and is designed to compare favorably to retail distribution (which has so many middlemen and infrastructure related costs as to end up with very large and often unpredictable costs of business).

[Lorenz-Kraft]

I think 30% is a fair price if you think of all the stuff that is provided.

In my view thats mostly: 1: a payment gateway 2: Server structure

I don't know HOW you could afford a standard like this when you sell your app for 1 Dollar ...

[crystalmace]

Because they can. They have a large userbase; being the only legitimate way that users can get apps for their iDevice gives them a monopoly on a huge market

[mooism2]

Why 30%? Why not 35%, 40%, 50%?

[petervandijck]

It's high, but seeing that they handle billing and that they own and created the platform, I think it's fair enough.

[mooism2]

The story goes that they only get 70% of the retail price for gift tokens.

[coralreef]

Interesting, never thought about that. Cost of doing business I guess, keeping users on your platform by making it another purchase option available.