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Comment by laser | Hacker News Reader

Apple shouldn't be able to get away with doing this. Full stop.

But from a pure business perspective, if they're charging on an annual basis, if the average subscription length is say, 4 years, after the first year the rate is 15% not 30%. Additionally, Apple pays all the transaction costs, which on a $99 charge would be ~3.3%. That means if they go with Apple's system they'll effectively pay 18.75% versus 3.3%. Do they really think they won't achieve 19% [1] more subscriptions with a native signup flow and payment option compared to only recruiting customers outside Apple's ecosystem? That's what they need to break even on Apple's cut here. If they do think that, I'd be tempted to claim they don't really understand the power of App Store distribution.

[1] 96.7% revenue cut / 81.25% revenue cut

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If you look at it Hey did not use in App Purchase, which is important from the perspective of the user. If I purchase a subscription then I should be able to unsubscribe the purchase of subscription from the app, also it is to make sure the app doesn't continue to bill the user even if the subscription is disabled. The app could be some remote offshore rogue company which continues to charge you even when you disabled the subscription. Also it could go ahead a charge for 12 month subscription when you only asked for 1. In app purchases have to be controlled for better user experience and consumer protection. There is a reason why there are tons of scam apps on Android but not on iOS.

This is seriously a very big point. Lot of companies (esp news sites) are luring you in with free trials and hoping you forget and keep paying the subscription costs. They make it hard for you to unsubscribe. Apple's approach is very good and very consumer friendly.

Btw I researched the Hey App, it is such a scam app. Its basically a dumbified e-mail service, that they are charging $99 per year, trying to create this buzz from this marketing and having "exclusive beta keys" and then having lots of fake reviews on their website and YouTube.

Absolutely.

37Signals has always done it their way and have made a fuck ton of money doing so.

Does apple allow different pricing on a service sold both on the app store and outside of it? That way people could choose convenience or a better price.

No you can't. If you do that then Apple review hammer will be wielded and you will end up in the same place.

What if their profit margin is only 30%?

In a software business? Presumably the margins per additional customer is 90%+, although with fixed costs it could obviously be much lower overall. But the marginal profit per user is the primary concern here I think with regards to payment provider cuts? As the fixed costs of development are already relatively set whether they have one user or one million.

It’s true, though, if they have a lot of manual support that could certainly hurt that, though. Or if they have a high customer acquisition cost. Excluding fixed costs if they are spending 50% per marginal user on marginal Dev/server costs, support, and customer acquisition, the numbers do start to get pretty uncomfortable. Would have to gain 50% more users to break even relative to the 3.3% cut.

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