This transcript was generated from the episode audio and may contain minor errors.
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Did you know that Apple, you know, the company that makes a lot of our phones and computers, other devices and such, new virtual reality tools, iPads and so on, did you know that they take 30%, a 30% cut on all kinds of in-app purchases? So if you're making an app or you have subscription payments or pretty much anything that goes to the Apple store, they're taking 30%. Now that can be a significant hurdle, especially for small businesses and independent developers who are looking to maximize their apps revenue. You're like, well, I understand there's gonna be a cut. I understand there's a commission of sorts.
What's it gonna be? Is it 5%, 10%? You know, that's kind of common, maybe a little bit more, but no, it is in fact 30%. So people have been complaining about this for years, but for the most part, it's kinda like, you just gotta deal with it. So we're gonna hear from an app developer today who's like, I don't wanna pay the 30%, what can I do?
Is there anything I can do? Well, you do need to remain in compliance with Apple's policy framework if you're gonna sell on that platform 'cause they've got millions and millions of customers and they're like, this is how it works. It's our way or the highway. But there might be a couple options. So this is relevant to anybody who might develop an app or otherwise offer something for sale in the Apple store.
And of course, if that's not you, well, we try to always make it relevant to as many folks as possible to think about how you can develop a side hustle idea. That's what we're about here on the podcast. Detailed question coming to us all the way from Bangalore right after this quick shout out to our sponsor. [Music]
Hello, I'm Priya, an app developer based in Bangalore. I'm in the process of developing a subscription-based wellness app, but I'm concerned about Apple's 30% fee on in-app purchases.
Is there a way for developers like me to avoid or reduce this fee? What are the best practices or alternative strategies that app developers use to maximize their revenue while still adhering to Apple's policies? [Music]
Hey, thanks for the call. Great to know you're out there in Bangalore. We've got lots of listeners in India and elsewhere.
Love hearing from our audience around the world. So actually there are some things you can do. Well, maybe first of all, I should just say, yes, Apple charges 30%, that is kind of the way it is. I guess you should think about the 70%, right? Focus on the 70% that you get to keep.
But if you're concerned about that 30%, couple of things you can do. Alternative payment systems that are outside the app, a lot of developers, especially those behind popular SaaS products, software as a service, SaaS, they direct users to their website to complete purchases or subscriptions. And that way the transactions occur outside the Apple ecosystem, therefore bypassing the fee. You just gotta be cautious when you do this because Apple is really picky about it. Apple wants to get their money.
So they prohibit actively encouraging users within the app to use a non-Apple payment system. So basically you set up an alternative payment system, but you can't nudge people too much, at least within the app, to use that system. You can do whatever you want on your website. So that's gonna help with a lot of users at least. Next, consider a tiered subscription model.
So where you have a basic version of your app with limited features and then encourage users to visit your website to sign up for more. LinkedIn Learning, really big company. They do a similar approach where users can access some content for free, but then have to visit the website to sign up for the full experience. Netflix is kind of the same way if I'm not mistaken. Also in-app advertising, just in case this might be part of the model.
Incorporating ads into your app can be a revenue stream that isn't subject to Apple's fees. Spotify does this, lots of other freemium models where the free versions are supported by ads. Users can then upgrade to an ad-free experience through a subscription. Again, if they do it on your website, then that's outside of that 30% fee structure. That can help.
You might've thought about this already, but cross-platform development, if you expand to Android, you can definitely use alternative payment systems. You can pretty much do whatever you want. And that makes it a lot easier. Of course, it's not always so easy to develop for multiple platforms, but those are different challenges. And then last but not least, here's a good thing.
If you are a small developer, which a lot of our listeners are gonna be, check if you qualify for Apple's small business program. They sometimes reduce the commission to 15% for certain businesses up to a million dollars a year. So that could actually be huge depending on if you qualify. I don't know all the details. So check into those things.
There are some things you can do, but overall when it comes to fees, I always try to think, how can I increase revenue? How can I not worry so much about the expenses? Even though 30% is quite high, that obviously gives you access to this enormous market of users. So if you make an app that they want, you're gonna be doing pretty well. It's all about finding the right balance.
Thanks again for the question. Listeners, if you have a question, sidehustleschool.com/questions, let me know what you're working on. And most importantly, work on something. Take action today. Take a small step to get closer to a goal that's important to you, whatever that looks like.
Of course, new episode coming out tomorrow, always free on all the platforms. No 30% commission. My name is Chris Guillebeau. This is Side Hustle School. [Music]
From the Onward Project.
