The cost of getting apps into Apple's App Store is $99 (excluding nonprofit organizations, schools, and government organizations, where the fee is waived). This is what a yearly membership to the Apple Developer Program costs.
And it's the only money that Apple makes from the vast majority of developers that use the App Store.
Think about it. Any app that's free to download and doesn't have an in-app purchase -- and that's a huge majority of apps -- make Apple no money outside of this $99 per year investment.
And that's a lot of apps. And a lot of big-name apps from big-name companies with deep pockets. And all those apps that are part of expensive services or devices that we buy outside of the Apple ecosystem.
So, is it time for Apple to raise the Developer Program fee? Or should Apple abandon it completely?
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In a couple of this week's exclusive daily update Above Avalon emails to subscribers (if you're an Apple watcher, then this $20 a month subscription is gold), analyst Neil Cybart crunched some numbers related to the Apple App Store, and they were quite eye-opening.
Apple has about 20 million developers, and let's say that, of this number, half pay the fee. That itself is a billion dollars. A lot of cash, and even more so when you consider that the Apple Store as a whole "only" pulls in profit of about $6 billion annually.
However, taking into consideration overall App Store revenue, what goes out to developers in payments, operating costs, and all other associated costs, Cybart estimates that the App Store only has a 4% net profit margin.
That's a thin profit margin for Apple.
And as the App Store grows, this figure could slip into negative territory.
So, one direction that Apple could go in is simply to raise the Developer Program fee.
$199. $299. $599.
After all, that $99 is legacy going back years, and things have changed a lot since them. It could be argued that access to the App Store has increased in value tremendously since it was first opened, and the Developer Program fee doesn't reflect this.
For some developers, this change would be nothing, for others it would be a big deal. It might incentivize developers to move to the in-app purchase model or ad-supported model, pulling in more cash for Apple in the process.
Apple could alternatively give developers on the $99 a year basic plan a certain number of downloads a year, and if they go beyond that they have to pay for an upgraded Developer Program plan.
Or Apple could go in the other direction.
Make the Developer Program free, see developers are a resource, and an important part of fostering the massive iOS and macOS ecosystem, and make it even easier for small developers to jump onto the platform.
This could result in some fresh developers and awesome new free apps coming into the market.
Not a bad thing at all.
The flip side of this is that Apple would have to absorb the costs associated with the App Store becoming even bigger.
Thoughts? I'm especially interested in hearing from iOS and macOS developers. Let me know!
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