Comment by milen | Hacker News Reader

Comment by milen | Hacker News Reader

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I generally agree with you. One of the interesting bits of information from the article is the financial boost from paid updates. You can sort-of approximate this on the MAS but none of the options are ideal.

In my opinion, you absolutely must give people the chance to try your product. This means having a trial build on your website, which most Mac indies do but it's a bit problematic for paid apps, as I presume a lot of people on the MAS itself are unaware. It's in the best interest of everyone to have trials - for customers, so that they don't feel duped and actually buy a product they're happy with and for developers, so that they acquire real customers, not play a game of "can we convince people to fork over money without trying".

Moreover, it's in the best interest of customers to actually provide paid updates - they can vote with their wallet whether a business should survive. But without the proper availability of paid updates, customers are left with no choice, even if they did want to support developers. Unfortunately, the voice of a vocal minority instils fear in developers to try and charge for such updates.

Given the current climate, our plan for the future is to lower our initial price and offer major versions as paid updates. Instead of, say, charging $40 for the current version + $20 for an update, we'll just always charge $30 for the current version. As a side effect, it lowers the entry for everyone and your real customers can still vote with their wallets and support your efforts, if they choose to do so. One of the downsides is the introduction of a new SKU which is not that much of a problem (before the MAS, you had to do the same anyhow). It's usually wise to provide a way for customers to stay in touch with you and hear about updates but only if they want to (don't smack dialogs repeatedly in their face, that's just not nice).

Do you think the exposure the Mac App Store offers is worth Apple's 30% cut along with the lack of upgrade options for customers? Why not also (or in place of) sell your software directly through your website?

I'm the author of the article in question, and with my current sales infrastructure, I'm able to spin up and sell a new product (SKU) in a matter of hours. Since I've been doing this for seven years, am I now overestimating the amount of work it takes to setup and sell your app independently?

We can't get in the MAS because we can't comply with the rules, but the ease of telling somebody to go purchase an app from a store where they already have their credit card on file is huge. I run a custom version of Potion Store, so it's only the cost of a Linode plus credit card processing. But I see most other indie devs who sell on their own use FastSpring [or similar] which charges about 10%. The word of mouth value of telling a non-techie to go install such and such app and have it be just like their phone is huge. They don't have to figure out what a DMG, where it went after they installed it. Etc.

I don't know about your jurisdiction but in most EU countries, the sale proceeds from Apple lie outside the scope of VAT. Thus, you need to subtract your effective VAT rate and the net effective rate that you end up paying on the MAS is about 10-15%. Which is very close to what you would pay for, say, FastSpring ("You have the option to pay either 8.9% flat or 5.9% plus $.95 per transaction" [1]). The biggest advantage of the MAS is that it's a distribution channel preinstalled on every single Mac - that's extremely valuable.

As you say, you would ideally sell on both the MAS and outside. In terms of selling outside the MAS, it does come with some overhead, mostly related to VAT. Even worse, the EU is changing the VAT rules starting from 2015 (the rule change itself is designed to remove the competitive advantage of big companies to be based in EU states with low VAT and sell products in countries with high(er) rates):

> Currently, the place of taxation for digital services supplies is determined by your location as the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer.

It's not a big deal since you can just sign up for the VAT MOSS but it's still more hassle than just putting up an app on the MAS. Note that all of this applies after your exceed the VAT threshold, which is different in different EU member states.

[1] http://www.fastspring.com/pricing.php [2] http://www.hmrc.gov.uk/posmoss/

We did the opposite. We raised the price [$50] and will only provide a year of free updates. Extra years come at a comparatively small cost. People hated being asked to upgrade regularly and we obviously didn't want to go years between adding major features. It seemed like the only way.

One interesting thing we have done, is offer a "lifetime upgrade" option for both upgrades and new purchases. About 30% of our customers buy it. It costs 50% more on a new purchase or 100% more if you're upgrading, but you get all future upgrades. It's a win for customers who want that, and it's definitely a win for us.

Even though your particular split between upfront + recurring costs is different than in my example, it's still in the spirit of sustainability. I honestly have no idea how the economics pan out if you had $50 app and $X yearly upgrade (or is it $X for 1yr of updates?) compared to, say, $20 each 1.5yrs. But in both cases, I think you'll have a chance of building something that can last.

Interesting stats about the lifetime upgrades - thanks for providing those. I guess it works as long as all of your users don't buy it (which means your recurring revenue drops to 0 at some point and you're back to square one).

Just raise the price until only a reasonable percentage do then! ;)

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