
Ask HN: What justifies 30% of sales by app stores? - funwie
Where do you stand on this idea of sales percentages to App Store? Is it justifiable?<p>App stores (iOS App Store, Google Play Store, Microsoft store) charge a percentage of sales made through the stores.<p>Which services do these stores offer that warrant them to receive up to 30% of sales.<p>An app in any app store already has 30% off it’s revenue. That is a huge amount. For some businesses, that is profits.<p>I assume business have to pass this 30% to someone else before they can make a profit. Guess who that someone is? Consumers
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kjksf
"is it justifiable" is an irrelevant question.

Apple charges 30% because they can. They can because software companies have
demonstrated they are willing to pay that 30%.

Apple holds all the cards so they have pricing power.

Contrary to your claim, this doesn't increase the price by 30% because the
price is not determined by the software company but by customers' willingness
to pay.

Price of software on iPhones is impossibly low. That's because for every piece
of software, there's a lot of competitors providing such software and
ecosystem evolved toward incredibly low prices.

That's also why making make mobile software is a terrible business for most.

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gpresot
They can charge these fees because they are the ones controlling the access to
final consumers. They have reached this control by spending billions in
building their platform (or even developing the smartphone in the first place)
and by keeping the platform secure and simple to use.

For many brick & mortar retail segments, fees can be much higher than 30%.
Supermarkets can charge easily 50% of final price as fee (i.e. they buy the
product from manufacturer at 50% of final price), and for some categories in
some countries it can be much higher still. This then pays for their
operations (warehousing, inventory, labour, rent of spaces in attractive
areas...).

Yes, consumers pay this fee ultimately, but they are happy to do so in
exchange of elimination of the search friction (a vast choice available under
one roof). In fact today we have largely moved away from going to the baker
for bread, then butcher for meat, the local market for veggies, the hardware
store for nails etc. Even dedicated stores (like clothing stores on the High
Street) offer choice of sizes, opportunity to try the garments on etc.) and
are in areas of high foot traffic that enable searching for the right product
by browsing in nearby stores. Ultimately, though, retail remains a low margin
(in % terms) business, a proof that those fees are not that absurd.

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throwawaymsft
> What justifies 30% of sales by app stores?

Supply and demand. If you think you could sell 70% as much outside the store
then go for it. How much do you think Amazon, Best Buy, Walmart and Target
mark up their inventory?

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pritambarhate
One important thing we tend to forget is that Apple and Google provide all the
tooling for iOS and Android for free. Developing the core OS, core programs
and development tools has required probably billions of dollars of investment.

As a programmer distributing on these platforms you get all of the above for
free in addition to billions of existing users. That's the reason I think 30%
is justified.

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mailslot
I hate paying it... but let’s be honest. Before app stores and the hardware &
phone OS’s they run, mobile apps weren’t a thing.

The justification is the distribution, curation, promotion, updates, support,
etc. The massive infrastructure needed to deliver the latest & greatest mobile
tech, the APIs that let developers take advantage of it, native payment
processing, tax reporting, etc.

You don’t even need an LLC to go into business for yourself. That’s huge and
worth 30% IMHO.

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rahimnathwani
30% gross margin is on the low side for software distribution. Google
'gamestop gross margin' for one benchmark (~35%).

Most people would be surprised at the retail margins for many products (e.g.
insurance) and don't realise how much bargaining power those that own the
customer relationship (Walmart, Amazon, Booking.com, DoorDash etc.) have.

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gesman
If you have relationship with powerful software reseller that can boost your
sales 50-200% - they can charge 50% and in some cases up to 75%.

It's not unheard of for young software companies to give 100% of software
sales to powerful partner to immediately boost visibility and brand awareness.

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joezydeco
_Which services do these stores offer that warrant them to receive up to 30%
of sales._

They deliver tens of millions of customers with pre-verified payment methods,
ready to purchase.

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ignoramceisblis
Because people agree to it.

There are a lot of new and ignorant programmers now, more than there ever
were. They will agree to terms that are "not balanced in their favour."
Programming is being commoditized by a limited number of managers and the
like. This is the result. They reap the largest profits. Look for yourself.

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dchuk
>>> Which services do these stores offer that warrant them to receive up to
30% of sales.

Tooling? Network effects? Security? Distribution?

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oldmancoyote
Someone might argue that Apple is buying wholesale and selling retail where
the standard markup is 33%. It's not my issue. Just an observation.

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wmf
Discovery (search, recommendations, and top 10 lists).

It would be interesting if apps could opt out of being discoverable to get
lower fees.

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db48x
All distributors take a percentage of the sales. In fact, physical
distributors probably have even better terms.

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moonbug
The simple fact that they have a monopoly on access.

