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Comment by Spivak | Hacker News Reader

I see this argument a lot and it makes zero sense. If your customers are currently paying you $15 for your app why would you suddenly undercut yourself and start charging $10 when you could keep charging $15 and pocket the extra $5?

Maaaaybe competition would force you to drop prices but a lot of consumer software isn't fungible and doesn't really compete on price.

Taking away Apple's 30% cut shouldn't be talked about as a pro-consumer move because it isn't. There's this pot of money that is either going to go to the app publisher or Apple. That's who the fight is really between.

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Well, criddell's claim is that there are a lot of people who really prefer to use Apple's payment system rather than a third-party one, such that apps that don't support Apple Pay will lose their business.

If those people really exist in large quantities (and I can believe they do!), the developer is losing business by not providing Apply Pay as an option. But that'd just lead every single customer to use Apple Pay, which is not what the developer wants. So you need to somehow give the people an incentive to choose your version, unless they really think that going through Apple is giving them a lot of value. Differential pricing seems like the most obvious way of doing that.

> Maaaaybe competition would force you to drop prices but a lot of consumer software isn't fungible and doesn't really compete on price.

That seems implausible. If you think that software prices don't matter at all, such that lowering prices does not increases sale, it'd follow that raising prices doesn't lower sales either. In that case, why hasn't the developer already raised prices?

Lowering prices probably would increase sales, but the problem is that is might also lower net profit which is the thing you actually care about. If you're a SaaS app charging $6/mo and you have a 100k MAUs then congrats $600k gross revenue per month! You lower prices to $4/mo, your users rejoice, and your sales and marketing find all the people who wouldn't buy in at $6 but would at $4 which happens to be 25k new users -- 25% growth! Amazing! Pop the Champagne! But now your gross revenue is $500k and you have more users to support.

But we weren't talking of just changing the price and keeping everything else the same. We were talking of not having to pay Apple, and passing the savings along to the consumer. With your numbers, the revenue was not 600k/month to start with. Apple was taking 180k of that, leaving you with 420k/month. So you getting 500k and Apple getting nothing sounds like a pretty good deal.

but it does not work like that. because you know that you would get a lot more customers if you cut your price 20-30% while keeping your profit margin. a smaller price is a great way to get customers on board and keep them, especially those that have only small benefit from your software. im paying for example for youtube netflix, evernote and so on although basic or none would be enough based on how little do i use them, but the price is low enough that it's ok for me. i used to privately use pirated version of MS office before it was this small monthly payment and so on.

> but it does not work like that. because you know that you would get a lot more customers if you cut your price 20-30% while keeping your profit margin.

That is very situational and hard to predict. There is a whole discipline behind this statement for figuring out the right answer.

Most games have extremely tight margins. Taking away 30% of their revenue means that many of them fails and will never make another game or that their budget for the next game becomes significantly lower. Both of those hurts the consumers interests.

If it was just 5% or so then sure it wouldn't be very noticeable, but just taking 30% outright is huge and will push many from being viable businesses to being forced to stop. The appstore isn't like steam which gets you a huge ecosystem of extra features for your games and tons of marketing. I'd pay extra to be able to add a game to steam even if I bought it elsewhere simply because steam adds so many other things.

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