Are the App Stores policies intruding into your business and grabbing your share of profit?
If you are an App developer or an App owner and have ever placed an application in Google/Apple’s App Store, you would have certainly come across the hurdle of paying the App Store Commission from the revenue earned through your app. This concept of App Store Commission was first introduced by Apple, later followed by the Google Play Store as well.
The Apple enforces a commission policy on the Applications, downloaded from the app store, which includes the in-app purchase system as well as in-app subscription, such as Skype, Candy Crush Saga, Bumble, etc. The company does not allow the proprietors to direct the user to their own payment gateway, instead compel them to make the payment from Apple’s payment gateway itself, collecting their share of commission from each payment.
Does your Application fall under 30% Commission Policy Criteria?
An App Store comprises of various types of Applications, according to which the commission is imposed on them. The commission applies on both Paid and Free applications, however with a set of terms and conditions accordingly. The applications such as Airbnb, Amazon, Instagram, Pinterest, etc., that do not include the in-app purchases are not eligible for the commission.
|Types of Application on the App Store||Commission|
|Free App including Advertisement||0%|
|Free App related to Physical Goods and Services||0%|
|Free App including In-app Purchases||30%|
|Subscription-based App||30%(1st year) and 15%(2nd Year onwards)|
The Commission Policy for the Applications depends on the following criteria:
Free App with in-app Purchase
These are the applications that do not charge you for the installation; however, it does cost you for the internal add-ons and services you opted for. The revenue of these apps is associated with the add-ons and services purchased, 70% of which remains with the proprietor, and 30% is collected by the App Store as a commission.
These applications allow the users to buy the subscriptions instead of purchasing the app itself. The idea of subscription earned a huge profit for the owners as well as the App Store. However, looking up to the success of subscription-based services, few companies like Spotify, raised voice against the commission policy, refusing to pay 30% of the revenue earned by the subscription. In order to address this, the Apple company made slight modifications in the policy, reducing the commission share to 15% from the second year of the subscription.
Paid Apps are the ones that are purchased by the user, following the same 70-30% commission criteria over the cost.
Avoiding App Store Commission with a Subscription Website
Paying 30% commission to the App Store on each app purchase is traumatizing to proprietors, especially for those whose apps are still in their early stages or giving an average performance. To address the issue, the proprietors are trying to figure out the ways to get rid of these policies and keep the 100% profit to them.
Few owners have changed their payment policies for the app services, each for the Apple and Google Play stores accordingly. Some of them have increased the price of the in-App services or the price of the App itself by 30% in order to compensate for the commission collected from the App Store. Some of the owners also tried to direct the users to their website from the app for the purchases, For Example, the Spotify app introduced a ‘Learn More’ button in their app which used to redirect the users to the Spotify website for any sort of purchases or subscriptions, which was later objected by Apple, requiring them to remove the button from the app. Hence, these alternatives couldn’t prove to be accommodating in their concern.
The app store is the best place to launch your app and get higher customer reach. Hence, the most plausible way to stay in the App store without paying the commission is to go for a Self-hosted portal and manage it yourself, or you can opt for a third-party subscription portal as well. Owning a portal empowers you to make your choices as per your convenience, allowing you to take complete charge over the factors like marketing, promotions, customer reach, decision making, payments, etc. related to your app, rather than depending on the App Store. To avoid the App Store Commission, you should centralize your App revenue to an online portal/website, which takes care of the subscription payments and renewals of the App. Hence, the customer can download the App from the App Store, free of cost, however for the additional services and upgrades, he can purchase the subscriptions from your website.
The Commission Policy is no more a hidden strategy, so you need to be smart enough to manage the revenue coming from your app. The best alternative to maintain a strategic distance from the 30% App Store commission is to expel all the purchase and membership modules from your application and adding them to your website.
If a user wishes to purchase any plan or upgrade a subscription, he can simply visit your website and make the purchase there. The purchases on your website will use your payment gateway, thereby restricting the use of the App Store billing system and hence the commission. The process may appear to be somewhat convoluted, however, rushing to a random and quick solution might intensify the situation. Choosing an appropriate team that holds expertise in the field will work here and prove to be the best solution for the problem.
So, its time to get your website built and liberate yourself from the unwanted expenses and commission. If you are already running a website, upgrade it with the vital modules, and reap the benefits. To Hire a Website Developer or any related assistance, Get In Touch with us.