If you make $10M in sales, Apple's cut is $6.2M annually | Hacker News Reader

If you make $10M in sales, Apple's cut is $6.2M annually

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73 pointsIndoCanada54 comments

Things to note:

1) The new terms are opt-in

2) The new terms have not been approved by the EU

3) The reason for the disparity is 10 million installs, which exceeds the 1 million threshold to pay €0.50/install. If you charge €1/install then you're paying 50% to Apple for that fee. If you charge €2/install then you'd be paying 25% to Apple because the fee is flat.

Yup - this example is deliberately cooked to create a misleading impression.

Uh, given the number of $1 apps on the app store, how is it cooked in any way? It represents a good bit of current reality.

$1 apps that make more than $10,000,000 in annual revenue?

The annual revenue does not affect the €0.50/install fee. 10 million installs would cost €500,000 for a free app under the new terms.

That's true but it doesn't contradict my point about a $1 app with 10 million installs.

In any case, a free app can always be released under the current terms.

I think the obvious point is that free to consumer apps still cost something in terms of the platform. It has been a common complaint in the past that apps like Uber or Facebook have a huge number of installs but don't pay anything. This simply brings transparency to that.

Except it can't "always" be released under the current terms. If the developer has ever released an app under the new terms, they're forced into them for all their future apps, forever. Likewise if they ever intend to release a different app under the new terms, all their old apps would be retroactively moved to the new terms.

The irrevocable and all-or-nothing aspect will make it pretty much impossible for any serious developer to ever choose the new terms. Just as Apple intended.

Perhaps expecting Apple to subsidize their apps was always unreasonable.

1 million installs already, not 10 million. And updates count as installs, so it is practically a yearly per-user fee.

I mean, the top paid games on the store right now are:

6.99, 1.99, 4.99, 0.99, 0.99, 0.99

That 1.99 (geometry dash) grosses 250k a month in the US alone.

And that 1.99 app would pay 25% to Apple, which is lower than the current 30%.

It's a valid criticism of the new terms. A developer-friendly (and dare I say, user-friendly) fee structure would not have any cases where Apple takes 62% of revenue. Any fee structure so maliciously structured that this edge case exists, deserves such criticism.

If it's an edge case then we can agree that it's misleading not to point that out.

The statement in the tweet is actually false in every case of making $10M in sales except this precise edge case.

It's not an edge case. Roughly 99% of paid App Store apps cost $1 or less.

The expensive apps that would pay less than 50% to Apple are the edge case.

99% of paid iPhone apps don’t have a million installs.

> If it's an edge case then we can agree that it's misleading not to point that out.

If the "edge case" you're talking about is the number of sales, then the tweet very clearly pointed that out. "If you make $10M in sales..."

So can we agree that nothing here is misleading?

It’s absolutely misleading to the point of bordering on a lie.

There are an arbitrary number of ways to reach $10M in sales and only one of them gives Apple a cut of $6.2M.

Every other possible way gives Apple a lot less.

Not qualifying it makes it seem like this is the rule not the exception.

> only one of them gives Apple a cut of $6.2M. Every other possible way gives Apple a lot less.

I'll assume good faith and assume that's not a lie, just a misunderstanding. The correct understanding is that the $.50 is a flat fee per install, and Apple's share increases as the price decreases.

If you sell the app for $.55, Apple gets all ten mil. If you sell the app for less, you owe Apple even more than users paid.

The headline is true for the 99% of apps that cost a dollar or less. If they succeed and make ten mil, Apple takes at least 62%.

> The headline is true for the 99% of apps that cost a dollar or less. If they succeed and make ten mil, Apple takes at least 62%.

I'm not going to assume good faith.

As written, the statement: "If you make $10M in sales, Apple's cut is $6.2M annually" is false, and I think you know it.

If you'd like to explain why you think that statement is false, with actual details and numbers, I'll consider it. As far as I can tell, it is true, and you've provided no evidence for your claim.

4) This atrocity was written and mandated by Apple

Of course people will still not boycott them. They're no better than Microsoft was in the 90's. Not sure if it comes at that high level of a company or they're not all that different to begin with.

They won't boycott them because 99.999% of people aren't mobile devs, and none of this impacts them in the slightest. It didn't impact them when the price was 30% of anything over $1 mil, it doesn't impact them now. The average consumer of Apple products doesn't even care about side-loading, although I'm sure a significant minority is very pleased that it's an option going forward.

I really like this site, but people do sometimes lose sight of the world they live in vs the world most people inhabit.

The pricing model very much impacts users, because it incentivizes higher app prices, as well as subscriptions over one-time purchases. Users certainly don’t like subscriptions (but Apple loves those).

As a user I don’t like subscriptions but I love Apple Pay - then only other payment provider I’d consider is PayPal

I don’t think I’d click on an external link to go to the app website to pay for anything

Whether third parties support Apple Pay or not is completely orthogonal to that pricing model. I use Apple Pay on web sites that have nothing to do with apps or app stores.

And this is why government exists, so it can battle these things without everything being a direct action from the consumer.

since it wasn't obvious - for developers to boycott them. Not Joe Montana.

Developers have been showing for a LONG time that they're long on talk of boycotts, and short on action. I really doubt that's going to change, the industry is mostly crabs in a bucket.

ah well, unfortunately I can't say you're wrong there.

Does this apply to free apps too?

Yes, unless you are a registered nonprofit, an educational institution, or similar.

Re 3: This means that Apple incentivizes developers against low app prices, in order for them to not lose more than half of the revenue to Apple once the million is reached. In addition, since the fee is yearly recurring, this incentivizes subscriptions over one-time purchases. The pricing model is not in consumers’ interests.

> The new terms are opt-in

It's unclear whether the old terms will be around forever or will be available to new developers.

They're also all-or-nothing for a given organization, as far as I understand; not sure if there's a way to form an "old terms subsidiary" entity.

> 1) The new terms are opt-in

> 2) The new terms have not been approved by the EU

I can't imagine how these terms won't eventually swatted down as malicious compliance. I'd really like to see Apple fined something like 20% of global revenue, or something like that. Teach them a lesson, seems like they need one.

Interesting to see how some people keep defending Apple as if it was their own company...

But if Unity tries to do the same then they revolt.

And most card payment processors will charge you more than 30% commission if you sell a product for $1. The numbers are specifically picked to make it look bad without providing a clear disclosure.

Where did you get that from? I only pay 10% fee on $1 online transactions

Stripe charges 2.9% + 30¢, or almost exactly 1/3rd.

What processor?

Paddle

Is it some custom pricing plan? I only saw the IAP program with those fees but it’s still a waitlist. Very interested to find a 10% all-in fee on $1-$10 transactions for arbitrary credit card purchases.

I can’t say I’m a fan of the pricing model, but the linked tweet makes specific choices regarding the number of installs, which in turn determines the pricing.

The tweet has 10M installs, where each one makes a $1. 5M installs where each one produces $2 in revenue results in a smaller cut by Apple. 20M installs at $0.50 results in a larger cut.

> pay per install

Isn't this the same model Unity tried a few months ago and rolled back after being flamed by the community?

Not even per release, which could've been justified by what they said about automated and manual reviews of apps submitted to _third party marketplaces_.

Why this got flagged?

I did.

...if you launch outside Apple's store and you charge $1/year/install.

I think Apple's "compliance" in the EU is crappy, but you don't have to use scenarios where companies hit themselves in the face to show it.

Yes, that is correct for 10 million installs of a 1 euro app.

(10M-1M).5 + 10M.17 = 6.2M

If you make 10M for a 10 euro app (1M installs), the Apple cut is:

(1M-1M).5 + 10M.17 = 1.7M

The upshot is, if you are selling a 1 euro app, stay on the App Store. If you make it a €1/year subscription, it drops to 15% in the second year.

Everything is in Euros since dollars don't really apply to the discussion, yet...

I didn't see specific CAC or ARPU numbers. Below a certain threshold, not many apps are able to sustain themselves. This noise appears to be a strawman assuming a very cheap app to make the numbers fail.

This is Apple’s way of saying “we got billions in our war chest to keep on playing law games and paying some millions in fine but we’ll get what we want!”

I'm not sure why some call the authors choice of 1$ per install disingenuous. Wouldn't that be the averaged out profit per app when you combine paying and non paying users?

Like for each app which costs 5$ I'd expect that there's at least 5 non-paying users using the free version.

Update: Also, the revenue per app doesn't affect the 0.5$ per app install fee. Meaning, if the app is making less than 0.5$ per install, averaged over free + paying users, then one would just be loosing money...

It’s disingenuous because they intentionally chose numbers on the pricing curve that resulted in the most clickbaity results.

There are plenty of valid criticisms, but I felt the author’s post missed sufficient nuance.

And the conclusion this guy makes is "I will never launch an app in Europe". I am speechless. This is the same guy charging $7500 a month for 60 minutes of consulting, promising $1M ARR for your app. And him, being supposed to know what exactly Apple meant by "we are protecting our users from dangers and malwares imposed to our users by the EU and DMA", blindly shills for the top tier anti consumer comapny of the century. And there are lots of people like this just walking around, making decisions, driving, voting and posting on social media!

This feels akin to the folks who go and price out a Mac with all the options and complain. The whole setup here is to generate a weird scenario / social media response and doesn't reflect what you would actually do.

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