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Comment by rsweeney21 | Hacker News Reader

This is huge!

I've had so many business ideas that I've killed at the idea stage because giving 30% of revenue to Apple or Google made it not viable.

Might be time to revisit them...

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Yes because if you could sell on your own website I’m sure you would make gazillions..

And since plenty of companies do have viable businesses on the App Store, doesn’t that say more about your business idea than anything else?

There's plenty of software that straight-up doesn't ship on the App Store. One could even argue that the Mac fosters it's own class of unique software since the App Store tithe is optional. I don't think Pro Tools or Steam would get Mac ports if Apple enforced the App Store limitations on their entire platform. It's trivial to imagine businesses that become viable without strict vendor pricing control.

Steam is just a marketplace for apps and just like Adobe’s suite and Microsoft Office you can buy a subscription outside of the App Store and your apps work everywhere.

This seems a great excuse to blame Instead of procrastination to me.. So 70% revenue was not enough to get something off the ground?

People complain about credit card fees in the range of 2%. 30% lost to the ether could absolutely kill some otherwise profitable ideas in the crib.

Most existing businesses would fail if they faced those conditions, so yeah, actually it is a great excuse.

Have a look at AWS’s margins if you want a deeper understanding

Good thing it's 15% for both of them then.

A teaser rate? Good luck getting publisher or VC funding for something that is a bet on you going big. They will discount projections by the full 30.

Yes I’m sure you could get VC funding by selling an app on the App Store.

Yeah of course you could, why wouldn't you? That is one of the easiest ways to get VC funding, up there with making a website.

There is a huge difference between making a “service” exposed by an app and making an app.

How many successful “apps” do you know of? And most successful “services” that people access through the App Store don’t go through the App Store for payments

> There is a huge difference between making a “service” exposed by an app and making an app.

Not in terms of Apple pricing, which is what we discussed.

Yes there is a difference - most services don’t go through the App Store for payments

On top of the other replies, the million threshold impacts smaller scale investment than VC as well.

How many business ideas does that guy have that make more than $1 million a year but would also be unprofitable after 30% app store fees?

It's more a portfolio of companies that many make less, but a few hits cover the investment in the rest (the standard publishing and tech investing story). If the hits are going to take a 18% rev loss compared to say Epic's 12% store, then that's 18% less funding for the rest if things are invested efficiently/predicted well for the portfolio.

Note it's 15% on the first $1 million then 30% after, at least for Google. So you're not losing money by being just above it either.

Yeah, I'm considering where $1 million isn't a significant portion of the revenue.

> This is huge!

> I've had so many business ideas that I've killed at the idea stage because giving 30% of revenue to Apple or Google made it not viable.

> Might be time to revisit them...

name 3?

If the profitability situation is about to change, seems like a poor time to reveal killer ideas.

Anywhere where you exist on top of someone else's service is basically killed by a 30% margin. To use an example I worked on a while back, dynamic Minecraft server hosting: Taking advantage of the fact that most small servers need much less than 100% uptime, you realize that if you dynamically spin up and down these servers, you can offer substantially better use-based pricing. You're basically an AWS reseller in this scenario, so there's a hard floor in what you how much you can charge, because VPSs cost money, but you're competing against "leave the server on 24/7", which is your upper cap. Unfortunately, unlike those "Up 24/7" servers, you need a good way for your customers to spin the server up and down. A phone app seems like a good way to do that, until you realize that 30% of that revenue potential would be forked over to the app stores.

100% AWS uptime, at cost -> your competitor's price

10-15% AWS uptime -> your marginal costs

50-60% AWS uptime -> maximum price you can really charge while differentiating yourself on price

25-32% AWS uptime -> subtract your costs and google's cut from that maximum price

When you start factoring costs like customer acquisition, it starts getting very, very tight. 30% profit can make for a pretty healthy business, especially in businesses where your prices and costs can be predictably coupled. But a business with a 30% profit margin that has to pay 30% is a failed business.

What you're describing is a service that has an accompanying app. In those cases, you can just take the Netflix route and not offer the subscription on the app at all (only through the website), and voila, no 30% charge. Given how little of the value proposition for your service lives in the app itself, neither app store is going to have a problem with that plan.

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