Google, Apple, and 15%

This is a story that will never fully go away it seems. Google lower it’s commission from 30% down to 15% on the first $1,000,000 in revenue in the App Store.

People often forget that Apple isn’t the only one with an App Store and wasn’t the only one charging 30% either. Game consoles like the switch, Xbox and PlayStation all still charge that amount. They also all, including Google Play store, have similar restrictions on in app purchases and require them to pay the 30% as well.

Also let’s not forget that most traditional retail adds a 50% markup while e-commerce stores generally add just 10%. Of course the cost of running an e-commerce store is much lower than a physical one but it also makes sense that the cost of running a digital platform like the App Store would land somewhere in the middle of those two extremes.

An e-commerce retailer still has marketing, hosting costs and generally pass most of the fulfillment costs to the customers. App stores aren’t shipping things but they also have to maintain and evolve the platform and apis themselves. Of course this evolution isn’t completely selfless, Apple itself uses those same APIs everyday in its own apps. And it’s clear that better apps from a wide range of developers always helps sells iPhones.

And as the platforms mature the costs to maintain them slow as well. So maybe some marker closer to e-commerce’s 10% is right?

When I first hear about Apple’s small business program if seemed like the perfect solution. Businesses with less than $1000000 in revenue in a given year only pay 15%. Great, with you so far. That cuts the rates in half and saves those businesses as much as $150,000 a year in App Store fees.

The problems start the minute you go over $1,000,000. From the looks of it even a dollar more than that means you are no longer eligible for the small business program the following year, ugh.

Google’s program on the other hand came out after Apple’s but is so so much more straightforward. The first $1,000,000 in a given year is always 15%, then every dollar above that is 30%. This is how taxes work and makes so much more sense!

In Apple’s program your app is doing well your best bet is to pull the app in December so you don’t go over $1,000,000 and revert to the full 30%. Adding to that Apples program isn’t automatic, you have to apply and pray you get in every year.

Apple made the right step by reducing their take on this and they we’re the first to market with these changes. They clearly are the reason google changed as well and that’s amazing. But now they need to swallow their pride and realize google’s variation is much superior and switch. This is how competition is meant to work, two big companies pushing each other to do what’s best for their customers