That’s the economy of all products. You spend money in order to gain notoriety (beyond word-of-mouth), hope that your product finds a niche, etc… You have to calculate your own risk to gain ratio. If you go solo, then you keep 100%, but spend more of your time marketing the product (or hire someone).
Let’s say this gets yous 100 customers, and you sell your product at $10 each. So you just made $1000 and you keep it all. However, you work for (easy math) $50/hour, and you spent 10 hours getting it out there. So of the $1000 profit, you’ve already spent $500 in order to earn it.
On the other hand, the app store could present you a 500 customers in the same amount of time. At the same price that’s $5000, minus $1500, so $3500 profit. You also didn’t spend as much time marketing, so you were able to put your time elsewhere. Instead you spent 2 hours setting it up in the app store, so it cost you $100 in marketing. A $3400 profit.
Mind you, that’s extremely simplified accounting and economics, but that’s how it works. Every time and financial investment have risk and potential profit, and it’s up to you to determine which risks are worth taking.
Yes I suppose (something I have overlooked) is the marketing aspect included within the 30% fee.
Let’s not also forgot that the developers of Angry Birds father Kaj was an entrepreneur who founded several companies, including Trema, a financial-software business that was eventually sold to a private-equity house for $150 million in 2006. The Angry Birds development costs was part funded by the father,
Even at £1million dollars for development costs and it never was a success, I would say that it would have not caused any hardship
Right, and it’s not just initial marketing, but marketing for the duration. It also gives users the ability to provide feedback, search, rate, etc…
Larger financial backing just increases ones likelihood of taking greater risks, but the risk is the same; they just have more to risk. Even the investors consider the risk before giving a company money. Also, investors, like Apple, want their money back with profit.
Right, my original queries have been side stepped here. Anyway my opinion is that 30% seems fair given the showcase, exposure and trust people have in the whole purchasing on App store. I also think having ‘one-click’ purchasing as app store does give rise to some whim purchases which would probably not happen if I was marketing off my own website using Paypal or the likes to complete the sale.
I have to agree with you Jason, my time is best spent developing not marketing. I can develop but marketing is not my forte and I haven’t got time or inclination to try and promote my wares on my own site. I have my own site but merely on the off chance a passer by stumbles upon it and I will redirect them to app store to make a purchase.
I suspect if things go well I will change my mind in time and sell from my own website. For now, Apple can do the promotion, hosting, money collecting etc for me and I will happily pay 30% for the work done and my time saved.
Anyway, back to my original query and Dave in response to:
I am not looking at chasing pirates, Apple app store will do a good enough job of protecting my app from running on multiple machines. I am more thinking of protecting my company. I develop financial apps. Lets say one of my apps has a bug and calculates a balance wrong, someone makes a decision based on what information my app gave them and then they go bust because my app has incorrectly informed them, I dont want dragging through the courts due to negligence etc. You see my point.