I regret to inform you this notion is false. There is actually a specific term for apps from the Mac App Store that have been liberated from their receipt validation.
It’s a lovely play on words, but pirates call them CAS releases. The C simultaneously stands for Crap and Cracked.
The receipt validation does not prevent copy anyway.
What I meant is that there is no such thing as a licensing system there. Apple or Microsoft, or Google in the Goole Play for that matter, will never accept an app that requires a license number.
My deep conviction is that copy protection is utterly futile. What is way more important is to have a good marketing. An unbreakable copy protection for 4 or 5 sales a month is downright pitiful.
Yes.
I estimate that at a stroke, it reduced my profit by 35%
Its too painful to describe.
You could read this:
http://www.digitalartsonline.co.uk/news/creative-business/vat-moss-facts-updated-january-6-2015/
What I cannot tell is if there is ANY legislation that can be applied to non-EU countries, ie developers such as yourself, Dave.
edit:
A little more reading in the hope that Brexit will solve this for me suggests that there is…
[quote]Myth: If we leave the EU, we wont have to worry about EUVAT any more
Not true. The EU Digital VAT rules that changed place of supply from the businesss country to the customers country for digitally-delivered sales apply internationally. Every single business in the world is affected.
If we leave the EU, we will still need to comply with these rules, if we want to sell to EU consumers (B2C only B2B uses different rules). Any changes made to these laws in the future will also apply globally.[/quote]
To put things in perspective, until recently prices in Euro were about the same as prices in Dollars with VAT added. So for US developers, selling in the EU is pretty much neutral, especially when selling through online stores that take care of VAT themselves. Today with a higher dollar, VAT tends to impact more.
For EU developers who sell mainly in Europe, VAT will directly impact profit. Unless I am mistaken, not by 35%, but by 20% or so, at least in France.
Note that MAS and Windows Store sales are impacted by VAT, but since prices in Euros are the same amount as dollars, it compensates the extra VAT cost.
Edit: rant removed as it was off topic. You got me started…
Thanks! This time of year it is easy to rant or get upset. The holidays are suppose to be a cheerful time but it is extra stressful for most. Thank you for not-ranting.
That’s not the correct way of looking at it. It is the customer who pays the VAT on top of what you charge.
Businesses buy items and the VAT they pay is reclaimed.
Businesses sell items and the VAT they receive from the customer has to be given to the state.
So a business pays VAT only on the value they add to the item = Value Added Tax
To say “It cuts into my profits” is silly. You earn money, you pay tax on it.
No, VAT does not come on top of what you charge. Price is final and includes VAT. In fact, 16.67% of what an end user pays.
Since software production cost is rather limited, value added is a large percentage of software. hence the impact of VAT is much greater, than, say, a brick and mortar business with 15% margins.
De facto, value added tax impacts directly the markup (gross margin). So it does indeed impacts profit.
In the US, or back some 40 years ago in Europe, sales tax works like you describe. The sales tax comes on top of what you charge. Say you sell a software $100 in California, customer pays $109. It does not impact at all the gross margin.
At any rate, at the risk of repeating myself, I consider it less important to whine about VAT, than to have the best marketing, in order to offset business costs of all nature. There are considerable improvement to make right and left about software sales, would that be to be present in major online stores like the MAS and Windows Store, to make sure evaluation samples are seen and readily available, to have decent and efficient web sites, to make it easy for customers to purchase, to create new software on a regular basis, to iterate versions to cover all bases, and so on.
The app market is very competitive, but also extremely profitable. In another life, I used to sell cameras. With the best of margins at 30% and much more often 15%, not to mention inventory weight, it was no piece of cake. Software costs close to nothing to produce. Even with the 30% cut of online stores, gross margin is close to 70%. I know not many industries where it is as juicy.
not even close to being true…
what is true is that there are no “material” costs… but there are licenses, hosting fees, not to mention the investment of time, since most software doesn’t appear instantaeously after one concieves the idea
Same reasons drugs are expensive… a $100 pill only has $3 worth of chemicals… but the other $97 is to cover the time it took to program the drug (ie. Research and Developement)
In the US drugs are expensive because they can be - no other reason. That’s an entirely different topic though…
true… I was just expressing the Drug Company “rationale” 
let your software on initial start create an unique string based on IP, Mac Address, hostname or username anything static which normally doesn’t change. show this ID on display and stored it locally within encrypted sqlite file
lead your user to your website, where he has to enter this UUID alongside with his registration information and email
on your webserver first check if he UUID is already used and/or the email address is associated to this ID. if everything is valid send the user an encrypted sqlite file with his UUID, email and company name inside. name this file license.
to unlock your software he has to drag & paste this sqlite file into an dropfield in your software where you check locally saved uuid with uuid included in your license file. save this license file alongside your local sqlite db.
on each start your software checks if UUID in locally saved sqlite is equal to the one stored in your license file.
[quote=301060:@Dave S]not even close to being true…
what is true is that there are no “material” costs… but there are licenses, hosting fees, not to mention the investment of time, since most software doesn’t appear instantaeously after one concieves the idea[/quote]
Compare the markup in software to any physical product, difference is striking. Sure there are expenses. But they are very low as compared to inventory, stock depreciation, rent and storage overhead, personnel, among others.
The price of software is almost entirely disconnected from production cost.
Note I am not referring to huge companies, but to indies companies like me and many here.
Should I admit that I’m a CA => CPA in the USA…
VAT works different to a sales turn tax (STO). An STO is applied at the end of the process, where as VAT is added at each stage in the production line so to speak. So as a simple example: my software vendors charge me VAT on the software I buy from them, which I can claim back if I use that software to write new software or services which I sell and charge VAT on and so the story goes. Now there are limits and exceptions and registrations etc… involved, which I will not go into.
In the end in comes down to your total turnover and if that exceeds the limit set by the government. If it does then you have to keep accounts on it including details of the VATable and not VATable invoices you issue. When you are inspected, the inspector will try to take down details of certain invoices from your books without you noticing and will record them in some great system in the sky! When they visit your customer they will be looking out for the same invoices and if they are not found the sh*t will really hit the fan for you!
Good thing my tax responsibilty are only to my city (sales tax), and State and Federal income tax
You have to be careful with talking about VAT rates, the EU defines product groups and collect about 1% of the amount, the rest goes to the national government and although most keep rates fairly similar some do not.
Sadly, I see you got the rants anyway. Oh well.
By the way [quote]‘I estimate that at a stroke, it reduced my profit by 35%’[/quote] … the 35% isnt all VAT
Its probably a higher figure and takes account of the costs of having FastSpring do the selling and VAT handling, then I get whats left.
You can argue that this kind of markdown is normal in retail, but the point is, I got it in full before these new regs came into play.
Then the govt taxes my profit too… 
A system based on a webapp to validate a license is certainly great on developer side, but can have a negative impact on the potential customer. What happens if I buy your software and in 5 years I have to reinstall it, will your server and your webapp always be available to validate my license?
Personally I use the client’s email address and a hash generated with this address, some application data, range of compatible versions, etc … You can also add to this hash an encrypted timestamp which you can read separately if needed.
This method is certainly not the safest and the customer will certainly install the app on several posts at home, but he will be happy to be able to do so. There is always the risk that it shares its license with its email on the net… but…
All depends on the price and the potential of the app: is the risk worth the development of a web service as well as the maintenance of this service over several years and the possible negative impact on customer side?
Good point. The simplest the scheme, the better. Customer experience is primordial to success, and convoluted protections schemes only mean consumers running away, not to mention heavy support, and very bad reviews.
Moreover, unless the app is really a killer app, it may never have the honor of being pirated. More probably, it will also get ignored by press, as well as by consumers.
Overestimating piracy is a classic failing of newbies to the app market. Better spend much more time and efforts in selling. And studying competition, to make sure the new baby competes featurewise.
Fully agree with Michel and would like to add that it depends on your type of software. If this is a high-price special purpose software e.g. for automotive or aviation industry than a copy protection is mandantory. But if you’re aiming to the masses, you shouldn’t invest too much time and effort in this.
The question is: Does classic desktop software has a chance when the train is moving rapidly toward cloud and web?