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Comment by zer00eyz | Hacker News Reader

Set up CC processing on the web:

How much are you going to pay stripe? 2.9% + 30¢ ... that means you have to charge 10 bucks to get down to a 6% transaction fee. Quite the price floor and an interesting cap on your pricing model!

What does managing chargebacks cost you? The moment your taking money your going to hire in customer service, or spend time dealing with CS. What happens when you get a chargeback, or do a refund? Most of the time you loose money (processing fees etc)

If your under a million bucks a year apple is 15%. If you're building a low price app or a value add app, odds are that apple is going to be a far better deal for you than doing it on your own.

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$10 = 6% fee; $5 = 8% fee. Both of which are far better than apple’s fees, so that point is a bit confusing.

Chargebacks = customer support. I agree with that, but if you have a B2C business which has any non-trivial revenue (OP is talking about word doc apps, so we’re obviously not talking about indie $2 side project apps), then you would already have CS anyway. I fully understand there is an opportunity cost with any service and where those costs get realized, but your examples don’t seem like a slam dunk in apple’s favor.

>> then you would already have CS anyway

Would you? Because I would argue that CC processing is the point where you NEED near real time CS. Before that handling customer issues can be done better through forums, and you're going to get a lot of self service support from those.

>> (OP is talking about word doc apps, so we’re obviously not talking about indie $2 side project apps)

Your competing with free, libra office, Zoho writer (shockingly popular)... I would not know how to price the product to compete... 2 bucks a month as a trial? Would I pay 10 bucks a year if you were great? IF you got said productivity app past 100k users, getting to a million isnt a stretch (you have velocity and popularity).

Unless your doing something really slimy, your going to be able to get a better rate out of apple if you ask your rep.

5% of my support has to do with payments and it's all about refunds.

Everybody pays for stuff online

Even when using Stripe (which is a premium payment service that's more expensive than most options) you'd be better off than the 15% from Apple as long as you sell for more than $2.5. And that's not even counting the up from cost that come with Apple (subscription + the need to buy a Mac).

How is chargeback being managed on Apple? I doubt they are swallowing the cost on their side, so I don't really see the difference between what'd get with a bank: you're losing the money anyway.

At 5 bucks a customer, you need 200k new ones a year to break a million bucks.

TO break even with apple you have about 80k a year all in cost to deal with all your refunds and charge backs.... after taxes, insurance and overhead that's 40-60k take home for a CS agent.

What is the charge back rate on digital goods? Im going to tell you that if your a small player it will be WAY higher than apple. Apple will cut a consumer off if they have a high refund rate, your CS agent will have no such insight.

%5-10 of your charges will just turn into refunds. Is that a process where you're killing license keys? Oh did you forget you now have infrastructure to run to issue and maintain said key? What is that going to cost you? Dont want to run like that... well ok then expect your return rate to go even higher. That discount CC processor is going to look at your refund and charge back rate and jack your fees up sky high (because that's the name of the game).

Once you get past a million bucks the open question is "do I do enough business to negotiate with apple". IN the case of a dry business oriented app, that has enough popularity to make that much, you might see apple willing to negotiate with you much sooner than a game dev who has sneaky buy options and huge charge back rates.

Chargebacks are a pain but are not that frequent. You need to make a way to refund your product easily discoverable because customers go unpunished.

You can use chargeback protection on stripe or use a different payment provider which absorb the 15$ fee for chargebacks

> At 5 bucks a customer, you need 200k new ones a year to break a million bucks.

But at $5 per user Apple is already much more expensive below the million threshold. It gets worse after a million, but it's already costing you tens of thousands before that. And again, you are comparing with one of the most expensive option on the market!

> after taxes, insurance and overhead that's 40-60k take home for a CS agent

Which, almost anywhere in the world, is more than you need to hire someone full time to work on your customer support! And no, what Apple provides is definitely not superior to a full time consumer support person.

The “value” that you pay for when dealing with Apple is access to their walled-off user base.

> the open question is "do I do enough business to negotiate with apple

This isn't an “open question”, it's a closed one: Apple isn't going to talk to you unless they think not giving you special treatment would get them antitrust issues. In your case or mine, it's not gonna happen.

Does Apple charge 15% for each dollar up to a million plus 30% for each dollar above a million, or when you cross a million (in a year), do they suddenly jump to 30% of everything? IOW, if I have earned $999,999 so far this year, I have to pay Apple about $150,000. If I then make another $1 sale, do I owe a few cents more or another $150,000?

And once your rate goes to 30%, does it stay there the following year, or does the whole system reset to zero each year?

https://developer.apple.com/app-store/small-business-program...

You’d owe the few extra cents.

You stay at 30% if annual proceeds continue to hit $1M/year. If not, you requalify for 15%.

15 percent on the first million in a year 30% for everything after.

Subscriptions are 15% for renewals (and maybe for all subs).

If your pulling in more than a few million a year from apple, and your not "gaming" or gaming the system I hear they are fairly open to negotiate. YMMV

Dealing with Apple is a tax as well though.

How do you calculate a price for not being able to release your main product? Usually without clear indications of what exact interpretation of a rule you are breaking...

We've had delays of a week because of things like we mentioned "Android" in an integration setting that had been there for years.

The cheapest in my country is 7 cent per transaction, the most popular is 25 cents. We also don't do claw-backs.

> apple is going to be a far better deal

Your math seems to show the exact opposite.

Do any of these problems go away when you sell in the walled garden?

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