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Comment by no_op | Hacker News Reader

Pretty much nobody prices software or digital services by looking at how much they cost to provide and adding some margin, which is how this implies Apple should be reasoning. The common model is to price on value. Taking a percentage of revenue is a pretty good proxy for that.

And Apple absolutely does increase your reach. Not in any important technical sense, but by creating a low-friction, high-trust environment, which results in a much larger market for apps than would exist if purchasing required users to type their credit card numbers into your web site and download and run an installer. This is a huge part of why native apps even emerged as a major phenomenon on mobile, against the tide of webification that's swept the desktop over the last 20 years.

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A percentage works fine, but you need a competitive market for that percentage.

> And Apple absolutely does increase your reach. Not in any important technical sense, but by creating a low-friction, high-trust environment, which results in a much larger market for apps than would exist if purchasing required users to type their credit card numbers into your web site and download and run an installer.

Plenty of companies will charge 5% or less for low-friction high-trust payment processing, and the auto-install is trivial.

Centralization significantly contributes to reducing friction and increasing user trust. Note that even on platforms that do allow competing app stores, market leaders can command similar percentages (e.g. Steam on Windows). This is why.

If Apple opened up the platform, developers wouldn't be paying 5% to Uncle Bob's Discount App Store instead of 30% to Apple, selling just as many units, and pocketing the difference as profit. They'd quickly discover that users preferred to buy from one or two trusted app stores, and that the better move was to pay whatever they had to pay to be present in those stores.

Centralisation, aka natural monopoly.

The minimum transaction cost for a 99 cent purchase is much higher than 5%. It’s likely over 10%, even for Apple.

Traditional pricing, including value-based, only works in an actual competitive market where customers have more than two realistic options. In the case of the app market, it's basically cartel pricing where both providers charge the exact same amount.

Is it? I mean almost everyone is at least somewhat familiar with cloud services, SaaS, DBaaS etc. All of those services have established pricing models and it isn't based on X% of what your business charges.

Apple could easily charge $100 for an app to be reviewed the first time and $50 an update to cover review, and the rest is very marginal. What Apple is doing is rent seeking on other people's work, plain and simple... it isn't even based on the profit margin against that work.

Not every application is a game on a console that will see millions in sales to make up for development costs. Consoles only see dozens of games as competition, the Apple store sees thousands. It's not an Apples to Apples comparison (pun intended).

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