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Building Apps that Circumvent Apple's 30 Percent Commission

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Some developers express frustration about having to pay an additional 30 percent to Apple for in-app purchases, especially for subscription content. Jeff Hughes shows you how to circumvent the 30 percent fee altogether by building a web-based app instead.

Fees, fees, and more fees. It seems like everywhere we turn there are more and more costs for doing business. For example, it now costs some banking customers $5.00 in monthly fees to use their debit card from their own checking account! It seems everyone is getting in on the idea of charging more fees.

As a developer you know that Apple takes a 30 percent cut of every app you sell for $.99 and up on the App Store. Actually, that's the going rate for any app store, including Android and the other stores that support Android apps.

Apple and Google also saw an opportunity to charge 30 percent for in-app purchases. So, any additional services or features that you charge for in your app are also charged at 30 percent. Most developers took this extra fee in stride because it made sense that another charge would apply to in-app purchases.

However, when Apple announced it was extending its 30 percent fee to include subscription services, there was a collective uproar across the app developer community. Not only were independent developers upset but so also were large companies that provide subscription services for newspapers and magazines on the iPhone and iPad.

When Apple first added APIs to iOS for subscriptions to iPhone and iPad users, they required publishers to offer subscriptions at the same or better price to their newsstand or website price. This meant that anyone who published content via an iPhone or iPad app would lose 30 percent to Apple for each sale.

Many companies that had developed apps or were in the process of developing subscription-based apps complained that the 30 percent fee from Apple no longer made sense for the app developer’s business model.

Because many subscribers were existing customers, content providers argued that Apple did not have the right to charge 30 percent for each subscription and that most companies selling content did not and cannot build an additional 30 percent into their pricing models for subscription content.

In June 2011, however, Apple altered its app review guidelines allowing publishers to choose their own price for content purchased on an iPhone or iPad. This means that publishers can add a 30 percent surcharge to any content they provide to make up for the lost revenue they might have incurred to Apple.

However, this still presents some challenges for companies that want to provide subscription-based content on Apple devices. People generally are not favorable to paying a higher price for content on one device as compared to another.

The app guidelines from Apple state that if your app allows subscribers to pay for content within the app, the app must use in-app purchasing through Apple, and you are free to set whatever price you like. If, on the other hand, your app provides access to subscription content purchased elsewhere and handled outside the App Store, your app can continue to do so.

Amazon Kindle is an example of this approach. Through the Kindle iPhone and iPad app, you can view eBooks, magazines, and newspapers provided by the Kindle Store. You go to the Kindle Store to purchase these subscriptions and then view them on your iPhone or iPad Kindle app.

Other publishers have decided to build web apps instead of using Apple's app commission structure altogether. This raises the question of whether all developers should look at building a web app instead of an iOS app to avoid Apple's 30 percent commission.

Designing a web app for the iPhone or iPad is nothing new. There has been talk of developers doing this for a number of years. The benefit of building a web app is that it doesn't require Apple's review and approval. Your app also might be more cross-compatible because it is not device-dependent.

Native iOS apps, however, can take advantage of all the components of the native user interface such as the accelerometer or the camera. Performance and reliability are also going to be higher when you build a native iOS app than a web-based app.

The beauty of the iPhone and iPad is that your native apps are stored on the device itself. Once an app is downloaded and stored on the device, it generally runs without requiring an Internet connection. Stock apps and financial apps are obviously the exception to this.

Some apps, such as games, will most likely need (and want) to utilize the native iOS capabilities that the iPhone and iPad provide for maximum performance, graphics, sound, and other capabilities. These apps, unless they're free, will have to pay Apple's 30 percent commission for either the app purchase or an in-app purchase.

Subscription-based apps could be the exception to the web versus iOS app question. Apps that do no more than deliver content to the user-such as a subscription to a magazine, newspaper, or ebook-are good candidates for a web-based app instead of an iOS app. The publisher of this content can build a web-based app, avoid Apple's review cycle and commissions, and provide its own billing system through their app.

All app developers must evaluate the type of app they are building and whether it can get away with being a web app instead of a native iOS app. Most apps need to be developed to take advantage of the iOS rich set of APIs. But some apps that are delivering content to iPhones and iPads should revisit the web-based app approach. It might just save you 30 percent!

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