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Comment by fauigerzigerk | Hacker News Reader

Potential consumer confusion has nothing to do with the size of Apple's cut or how it is structured.

Clearly, a 30% cut is fair for the average $1.5 purchase because it includes fees for payment processing and fixed cost per app.

But Apple will have to decide whether or not they want people to sell more expensive stuff on their platform. Taking a 30% cut on a $100 purchase is not economically viable and it is unnecessary if the goal is to avoid consumer confusion.

They could just charge 50 cents + 5%

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> Taking a 30% cut on a $100 purchase is not economically viable

The market for a $100 app isn't very large, and that price point is also a target for fraud / scams / accidental purchase complaints. This risk is offset by additional review scrutiny, but the cost for that additional scrutiny is amortized over a small number of potential customers.

The result of all this is that $100 purchases are expensive for Apple to run, and Apple as a rational actor should discourage them. I wouldn't be surprised to learn that the whole $50+ market runs at a loss that is covered by the cheaper apps.

Even for a $20 item 30% cut is not acceptable either, considering what Apple actually did is simply app hosting + payment processing. App Store did a really bad job on app discovery and promotion, so I don't think they deserve anything on marketing. However, they can charge developers for being featured on the front page.

> App Store did a really bad job on app discovery and promotion

You think most app buyers found their apps outside the app store? Unlike folks reading HN or tech sites and trying new apps thanks to app launch news, the normals I know find their apps only within the app store (other than the occasional app roundup in a mainstream printed magazine).

If you look at the CC processing industry, ranging from 5% fees for the most basic service (transaction + cc + merchant + bank) to 15% fees for an end to end service that cuts you a check, the 30% to also manage the user authentication and customer service is a reasonable deal, completely aside from marketing.

Finally, as a user, I don't want featured apps to be the ones paying to be featured. Not cool.

From my own experience and friends I know, users rarely go the app store and search for a term. What they do there is check out the high ranked apps. The most effective way of discovering an app is still recommendation by mouth or websites. There are a lot of app review blogs out there for a good reason.

We are talking about different business. apps/ebooks generally don't have a high margin.

15% for an end to end service? Citation Please! Paypal, Stripe, Braintree and those guys don't even come close to that. If you are getting charged 5% in fees in this day and age then you are doing something wrong... at least here in the USA.

Apple has a cost of no more than 2.5% for credit card fees, and its probably even a few tenths lower than that. That I will guarantee (seeing as how I have seen companies in the $5million/year range get that percentage from an end-to-end provider, and Apple is quite a bit more than that in volume).

What I think is really ridiculous is that they want to charge 30% for subscription type services. One time app purchases... ok, maybe I can see that. But for a $5/month or more subscription being bought through there its absurd and making it more of a pain for the user because the app developer is forced to break with the single-billing system due to costs. So, simplicity actually hinders the experience here.

> Citation Please!

My company has developed a CC gateway server, and has processed as much as $80M a year in transactions for a single client. This is a business I've spent a lot of time in.

Also note that digital goods and physical goods are different categories. A full service provider of "digital goods only" processing for clients without merchant accounts charges much more than a company like Paypal, Braintree, or Stripe, which process for physical goods as well.

Apple also provided a large amount of eye balls for services that is available through the Apple app hosting system.

> App Store did a really bad job on app discovery and promotion, so I don't think they deserve anything on marketing

I have never understood this argument. It's a bit like saying "WalMart does a bad job promoting milk discovery, so I think they should sell it at cost."

This post is not about the price for an app, but the price for a service (SkyDrive) provided through an app. The market for services is huge. If you deliver a service paid through an iOS device, Apple wants a 30% cut.

That's a great solution, actually. Think of it more like a credit card processing fee.

How have you been brainwashed into that being acceptable?

I don't understand... elaborate?

That taking a percentage of a transaction and giving it to a credit card company is OK.

They are providing the service of making your money available for payment without you having to think about the logistics of moving the money (plus credit facilities, chargebacks, fraud protection (If I have a wallet full of money and someone spends it I'm down that cash. If I have a wallet full of cards and someone spends with them, I'm covered.)). It only seems fair that they get paid for their work.

Whether the amount they charge is worth the services they provide is another question entirely.

You are completely missing the point.... I at no point suggested that they shouldn't charge.

That it is a percentage of the transaction amount is what I have a problem with. If their business was truly about "credit" they shouldn't need extra charges as they claim back more value from bigger loans/transactions.

Debit cards provide the same service without a percentage charge but without the payment protection. Its a rigged game.

I thought the percentage charge is used to cover the cost of fraudulent transactions?

That's 10 times the normal fees.

Remember that you can put money onto your iTunes account using gift cards bought at retailers. Those retailers will get a cut (someone here probably knows but lets guess 10-15%).

That doesn't reduce it to a zero profit operation but at least on that portion of the revenue it looks like a lot than 30%.

Too late to edit but the end should read: "it looks like a lot less than 30%."

It would be interesting to see what percentage of gift card dollars never get redeemed and how long they take to get redeemed.

They have decided.

This makes sense.

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