BirchTree

Talking tech since 2010

Why 30%?

I keep thinking about this 30% cut Apple gets on App Store purchases. The conversation usually has three general sides:

  1. 30% is the right number
  2. 30% is too high and it should be lowered to something like 10%
  3. 30% is okay, but merchants should be able to do payments themselves if they want

I’m a mix of positions 2 and 3. I think 30% is probably too high for what you get in 2020 compared to what you got in 2008 when the App Store launched, but I’m also much less opposed to it if there was a fair and consistent option for merchants to take payments outside the App Store’s system.

There is a ton to unpack with this conversation, but my question today is this:

Why is 30% the right amount for Apple to charge merchant selling on their platform?

What if I argued 25% was a more fair cut? Would you argue 30% is fair and 25% is unfair? What’s the measure we’re using to say 30% is the correct number?

Is it because this is how it’s always been? That’s not particularly compelling as to why it must be that way for something to stay the same forever.

Is it because the Play Store charges the same amount for the equivalent in-app purchases? Since when is Android the barometer for how we do things on iOS? Do we also think Apple should ease up on their privacy policies because Google isn’t as strict?

Is it because Apple distributes, promotes, and handles payment processing for your app? That’s why they could warrant some, but again I ask why do you think 30% is the right number?

Is it because it’s what the market has shown it will bear? Considering all the big players, and more of the smaller ones too, have different deals or allow sign up outside the App Store, I’d argue it’s not what the market has agreed is right, it’s what they can do to the little guy. Also, since Apple actively tries to block other options, I’d argue the market hasn’t shown anything, it’s only had this option.

Is it because Apple deserves to make a profit too? Apple is the biggest company in the world and their profits are wild. In the past quarter they made $87,000 in profits per minute (or about $174,000 in the time it took you to read this article). I know Apple is a business and they are compelled to make money, and reducing someone else’s income is always easy, but to suggest Apple deserves all of that 30% more than giving a little of that back to the smaller companies trying to put food on the table is not a position I feel like I can take.

So I come back to the question: why is 30% the right amount for Apple to charge merchant selling on their platform? You can argue all you want about the benefits of the App Store for both merchants and customers, but that does not explain why 30% is the line in the sand we shall not cross.

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