What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can no longer download/update, but the installed binary is not affected.
Sorry, when is this fine?
A dev flogs an app at 10 and pays 3 to Apple. Then on a refund they lose 3 and the end user has no incentive to even delete the app. Nope, I won't entertain that nonsense.
The only way that I can see for that model to play out is for the dev to factor in a lossrate x 1.3 uplift for their app. That means owners of shiny iStuff are paying Apple an additional unannounced "tax" based on their app churn. Use and discard more apps, then you pay more for the privilege. A dev would have to become a loss adjuster as well: "Hmm assume a 10% return rate" - so the upcharge on my app will have to be:
* My app should cost 10, assuming a fair market. * I lose 3 on a refund, which happens on 1/10 sales (I was paid 10 on sale, I paid 3 to Apple, I refunded 10 and hence lost 3)
So my price adjustment would be 10 + (0.1 x 3) = 10.30. Yes, it looks like a simple uplift will deal with this. Sales: x, churn rate: c, Apple tax: a. => s' = s + (c.a)
That is anti-competitive behaviour on a gigantic scale. Apple are making the apps that are developed for their platform automatically more expensive by a process that looks suspiciously like stealing.
I call that parasitic.
If there is a sunk cost component that number skyrockets.
Try adding a $5 customer acquisition and $1 developer time.
Thats a $1 profit, you need to sell 3 apps to cover the cost of apples fees. You also need to sell another 6 to cover the sunk costs you don't get back.
So 1 refund costs you 9 sales.
To cover the 1/10, you'll need to charge 10.90, or more likely 11 to cover the moving 30%.
But this is just to break even with your original $1 profit margin.
At work our refund rate is like 30% for Japan. Investigating this, it turns out there is a cultural behaviour where converting at a higher rate early and refunding if it's not a good fit is the normal way of doing things.
And in a past life, general 4% refund/return rate is pretty common across most ecom markets.
Not saying apps are in this boat but if you ignore refunds in business you're in for a bad time.
Ignoring all other factors, flogging the app on Apple automatically introduces a parasitic "tax". That is the hallmark of a monopoly.
This. Is. Ridiculous.
We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.
But Apple does sell one app through the iTunes App Store (Dark Sky, which they recently acquired). They sell several through the Mac App Store.
So, they do dogfood, but obviously they are not depending on revenue to survive here.
Side note: there are a bunch of apps listed under their developer that I had not seen before: Music Memos, Indoor Survey, Texas Hold'em, and Reality Composer.
Their pro apps are almost given away for free.
You could argue that $200 for Logic is not free, but similar DAW products costs 4-5 times more.
Not only that, but competitors need to charge you for major updates every couple of years, like any developer. Since Apple released Logic Pro X in 2013 it has kept pushing updates without asking for money.
I've seen this circumvented by creating a package deal of the old and new versions, which then gets discounted via the "you already own part of this set" mechanism, but it's a messy experience and not something that many developers have done.
So it's not at all feeding they own dogfood. Do do so Apple would need to run separate finances and make sure they don't get benefited in the review process.
Here's another example from Wil Shipley where someone purchased 30 education copies and then refunded all of them. Total for the day nets out to -18 purchases and sales of $-360:
https://twitter.com/wilshipley/status/768540129203855360
If you made say a high profile game that a particularly whiny subset of gamers took notice of, I imagine it could be much worse, but I don't know that this has happened yet. I'd bet money that it will though, and you have to wonder what Apple will do about it.
I see this as a good thing, since it probably means that only the user is capable of removing apps, requiring intent, and that Apple can never remove an app from my device.
(Except if your phone never connects to the internet or a cell-phone at all ;=) )
Also apple could just require the user to remove the app before requesting refund or at least putting it in a partially removed state from which apple then can remove if.
I.e. there is 0 benefit for any serious acting person. Only people who try to rip of app publishing companies profit from it.
Want a refund? Awesome. Delete the software from your phone. Then, go to the appstore, find the app again, and click 'request refund'. If apple wants to improve the user experience, they can offer 'request refund' when someone uninstalls a recently bought app.
Or if that's too much of a disruption for users, just requiring the current device to delete it would cover most cases and be better then the current situation.
Users can set each device to automatically download and install newly-purchased apps.
Imagine the case where there is a device you have misplaced (or given to a relative, or had stolen, or ___). You must find every device with auto-download and purge the app from each one before requesting a refund.
So you create a situation where it is possible that the user quite literally can't comply with the terms of the refund.
Perhaps a compromise would be to
1. Delete from the current device; and 2. To verify the status of each app during OTA updates (which, by definition, have connectivity to Apple's servers). Any refunded apps would be greyed-out or something.
Uninstalling an automatically installed, never-opened app is not a breach of the personality of your device.
Why would you want Apple to have access to everyones online/offline usage habits for apps, and scans every time you restore a backup?
Why? Apple controls the OS, and can blacklist any App they want. They dont need to know whats installed on your device to prevent it from running.
Apple gets $30, and you never see it.
I believe that the $70 is taxed; not the $100.
I know that if a customer get a refund, the full Benjamin comes back to them (I have received refunds).
So does that mean that Apple asks the developer to pay "back" $100, when they only paid the developer $70?
I have never had to issue a refund, so I don't know.
Kind of, except Apple doesn't ask, instead Apple automatically reconciles the balance debiting the $100 from the payout balance Apple maintains.
That's the part that puzzles me. If there's a refund, and they penalize me by charging $30 more than I was actually paid, I see that as being problematic. Also, I suspect that it would be illegal in some venues, unless clearly spelled out in the contract. I'll have to spend some quality time, reviewing my contract, to find that...
> 6.3 In the event that Apple receives any notice or claim from any End-User that: (i) the End-User wishes to cancel its license to any of the Licensed Applications within ninety (90) days of the date of download of that Licensed Application by that End-User or the end of the auto-renewing subscription period offered pursuant to section 3.8, if such period is less than ninety (90) days; or (ii) a Licensed Application fails to conform to Your specifications or Your product warranty or the requirements of any applicable law, Apple may refund to the End-User the full amount of the price paid by the End-User for that Licensed Application.
...and here's the (literal) money shot:
> In the event that Apple refunds any such price to an End-User, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. In the event that Apple receives any notice or claim from a payment provider that an End-User has obtained a refund for a Licensed Application, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. In such cases, Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the End-User.
So that answers the question as to whether or not it does happen; but not whether or not it should happen. I guess developers could ask their congresscritters to grill Tim about it...
It wouldn't be foolproof in case of backups but it would be a lot better than an honor system.
And doesn't apple have some form of remote logout/factory reset feature for lost devices?
EDIT: (Sure requiring remote factory reset for lost devices would not work if it's a iPad which has not internet connection and never gets one again in it's live time, but that would be an acceptable corner case I thing).
If you no longer have access to a device you used to own, you should use findmy to remote wipe it.
If you really didn't want that, then you should at the very least go through the trouble of filing, with apple, that the device is lost or stolen, so that any attempt to return that device to an apple store or reseller to fix it gets it flagged.
It seems bizarre in the extreme that you'd want to somehow protect your privacy by not reporting your stolen stuff as stolen with apple, but that you opt in to a system where installing apps requires going through a single vendor.
It seems odd, though, that Apple wouldn't have an API that allows locking app functionally behind licenses; on Android [1],
> With Google Play Licensing, your application can query Google Play at run time to obtain the licensing status for the current user, then allow or disallow further use as appropriate. > ... > Note: The Google Play Licensing service is primarily intended for paid applications that wish to verify that the current user did in fact pay for the application on Google Play. However, any application (including free apps) may use the licensing service to initiate the download of an APK expansion file.
In other words, the licensing service checks for both IAPs as well as if you've paid for the app itself.
This is what their subscription system does, though. I'm not familiar with their for-pay app setup, but for subscriptions you can monitor the receipt and see what it's status is. Perhaps you can't do it from there, but I know when even an free app is installed, you still get receipt information written to the device.
They do have something like that: https://developer.apple.com/documentation/storekit/in-app_pu...
I probably wouldn't go as far as 'dystopic' either.
They could also make the removal part of the refound process in which case the user would delete the app through the refound process.
The idea that this is because it protects users isn't holding up any closer inspection.
I don't see how this would explain a disincentive to charge higher prices.
Take other payment processing platforms like Stripe as an example. Stripe charges $0.30 + 2.9% to process a purchase.
To help build your (and my) mental model: Price of item -> Stripe revenue (rounded)
$1 -> $0.33
$5 -> $0.45
$100 -> $3.20
Apple's 30% cut makes sense if they were expecting most apps to be roughly $0.99 (anecdotally, I remember this being true during the early days of the App Store) and the (presumed) few apps that cost more than $1 would be the "whale" developers that would subsidize Apple software development. But nowadays apps are a lot more powerful, feature-full, and development-intensive so higher prices are required for any hope of profit.
So the math you have is right, it's just that the path to profit is a lot harder when the ONLY way to sell your product is to have >=30% cut out immediately upon sale. Some stores set a minimum (e.g. $5) sale amount for using a credit card and those payment processing platforms have fees orders of magnitude less than Apple's App store
(Sales not refunded * 0.7-refunds * 0.3) * price
If
Sales not refunded/refunds<0.3/0.7 ~ 43%
Then profit can be negative (you lose money because more people refund than not).
>57% refund rate literally makes you lose money from listing. But even if just quarter of people refund that eats almost half of profit.
EDIT: ofc in the Twitter thread, there's few disputing that if this is actually true, or if maybe Apple does different things in different markets, etc. so everything with a grain of salt I suppose
For in-app purchases, up until a few years ago, users would always have access to them (even after a refund) then it followed the same rules as paid apps - access always maintain but one couldn’t restore.
Subscriptions however are unique as a server would constantly check the receipt from Apple, which would show a refund flag, so you could block access. Now they even send you a push notification to your server to indicate a refund.
With iOS 14, in-app purchases will get a “notification” when a user receives a refund on device (with IAP encompassing subscriptions).
So it’s getting better. Not perfect. But better.
Whether you sell 1000 copies at $100 or 100,000 copies at $1, assuming the percent of refunds is constant, then the effect is identical. Right?