> Other than the non-Apple part, that's how it pretty much works now. Only 3% and 8% of apps in the stores are paid on Android and iOS respectively, and counted by downloads it's probably much lower. IAPs might be over 99% of revenue.
Yes, but all IAPs now go through Apple and they get their 30% cut.
> hey're so seamless that as a customer, I'd probably still use them unless I were getting a substantial discount to do otherwise, and sometimes even then
Well, every app would easily be able to offer you a 25% discount (30% - 5% to account for transaction fees), since they would not be paying the Apple fee.
> Well, every app would easily be able to offer you a 25% discount (30% - 5% to account for transaction fees), since they would not be paying the Apple fee.
Since when have companies passed on fee decreases to their customers instead of accepting the effectively free higher margins?
Yeah, they wouldn't. Marginal costs to app developers are effectively 0, so profits and revenue are synonymous.Thus prices are set to maximize revenue. If setting my IAP at $10 maximizes revenue, that's true whether the processing fee is 0% or 30%. Cost to consumer is determinant.
Now if I'm given the options of accepting App store payments at 30%, and let's say PayPal at 3%, I'm going to offer the customer a little discount to switch to PayPal. That too will be whatever discount maximizes profit. That wouldn't be too hard to determine with testing, and would depend on how easy the payment methods are and how much customers love the convenience/security of Apple's payment system.
For me as a consumer, if I got offered a 10% discount and had something comparably easy to use I'd probably go with it on small transactions. If I had to enter a credit card, I'm not going to bother on a $1 or maybe even $10 purchase for that little.
> Since when have companies passed on fee decreases to their customers instead of accepting the effectively free higher margins?
Since companies had to compete with other companies. The moment the Apple tax is lifted, at least one company will lower prices. Other companies will be forced to follow suit. I'm not saying ALL the price decrease will be passed to consumers, but some of it definitely will. Especially since a lot of these goods are currently sold at a mark up on the App Store right now.
I think this model looks at apps as widgets too much. People don't price compare IAPs. Nobody's like "well fortnite charges X for Y, but Minecraft charges A for B." App store revenues are probably largely games or similar things that don't really have a competitor you can easily price compare against.
App developers set their prices at whatever maximizes revenue (which is often determined by testing) and the payment processing fee has no effect. It's more like Coke pricing at an airport than Coke pricing at a gas station with another gas station next door.
I expect they'd offer whatever discount maximized revenue, so the real question is how much of a discount do they need to offer to get you to switch from app store payments to some other method? Other methods are largely pretty seamless these days too, so the answer is probably not much. I expect consumers would barely benefit.
(Source: been doing games with IAPs for 13 years).
Right, I was just pointing out that for the consumer, there's basically no difference in app business models. It just may be a different payment processor and maybe lower prices.
My original point wasn't that there will be a visible difference to the consumers but that all app purchases and in-app-purchases will be structured so that Apple's cut goes to zero.
If Apple allows non-apple payment without major restrictions, it's revenue from app store will trend towards zero (save for inertia).
Yes, but all IAPs now go through Apple and they get their 30% cut.
> hey're so seamless that as a customer, I'd probably still use them unless I were getting a substantial discount to do otherwise, and sometimes even then
Well, every app would easily be able to offer you a 25% discount (30% - 5% to account for transaction fees), since they would not be paying the Apple fee.