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Comment by sls | Hacker News Reader

Marking things up 43% generally impacts sales.

If it is a “specialized”,”pro” niche app people are usually willing to spend more.

It’s hard to make a living selling a niche app to price sensitive people.

Also if it is a niche app, with a small addressable market, how do you continue making money on it since their is no facility for upgrade pricing - especially since you have to keep releasing updates to support newer devices and new screen sizes?

If it's a niche app, I'd imagine you would monetize it differently than a 99c clicker game (eg. sell a subscription to the app on your website, or supply it as a companion to hardware you sell, or something) and the app itself would most likely be free to install off the web store.

I've seen companies get around the upgrade pricing question by just releasing a new version of their app every year and deprecating the old one.

"people are usually willing to spend more" : not in my case ( and probably many other)

when i say it is a niche market i mean it not only in terms of number of customers, but also in term of potential generated revenues. there are businesses , especially in artistic fields, where people simply aren't willing to spend a lot of money on accessories, even if they are useful to their job.

now i'm not saying i will never be able to be profitable enough. just that with my current marketshare ( which is very good on a local scale, but not yet worldwide), those 30% are what makes the difference.

ps : as for the revenue model, i had to invent some kind of pay per use model, based on in app purchases.

I think perhaps your business model isn't as solid as you might think. Producing an app is not a free pass to live on the revenue, and the market capture is an important part.

I'm not an app developer, I'm in the music industry (day job in IT infra), but it seems to me there are some people projecting their bad business sense onto Apple. As per my other comment in this thread, and the reply someone made for me, the commission drops on subscription based apps, could you not use a subscription, rather than your pay-per-use system (which sounds like a creative workaround, kudos) and then you'll get the benefit of the tax rolloff.

Trying to make your own way in this world is damn hard work, and if a business model falls apart because one needs to "pay taxes," Apple will not be the biggest problem for very long. I'm sure most here would agree that it stinks that Apple are demanding a 30% tax whilst paying ~0% to the U.S. Government, but that is the way of things for now.

I don’t understand your comment. I have other sources of revenue, mainly doing development for customers. I didn’t bet everything on that app and raised money on the expectation this would be a gold mine. I’m just stating a fact : without those 30%, in my present situation, i could live only based on this app revenues. With the 30% cut, i can’t.

I’m sure most people could live off of less revenue if they didn’t have any expenses.

But, a niche product where people aren’t willing to spend money is a business model problem.

That's one way to look at it. All businesses come down to balancing income with expenses indeed. All i'm saying is that 30% cut on the income by apple makes it harder , and sometimes impossible , for some business model to survive.

Understood.

But do you know how many businesses would die to be able to sell products that had a 70% gross profit margin?

I'm not sure about your calculation. A business with only 29% gross profit margin wouldn't be able to survive on the app store because they'd have to give 30% to apple.

Where did you get 29% from? I’m assuming that you are the only developer working on this (you didn’t say otherwise), for every $1 that someone spends, you get .70 cents.

But then why do you assume i've got no expenses ? Just because i'm the only one working on it doesn't mean i don't have to pay myself something to live. That's actually my point : the app doesn't generate enough revenue to cover my personnal expenses.

The marginal profit is the price the good sold for - the marginal cost. The only thing Apple has to do with this is the 30%.

The only fixed cost imposed by Apple is the $100 developer fee and whatever it cost to buy a Mac.

This raises the question ‘harder than what’?

The services provided by the App Store would have to be present for the business exist at all.

So without the 30% Apple charges those businesses would certainly not survive unless they paid someone else for the services.

I understand, I was inferring some blame on Apple's part from your commentary -- as though they were denying you a living from your app. Anyway, thanks for the discussion. Probably shouldn't necro this thread any more than I have :)

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