Brain Murmurs

There has been a lot of bitching about the terms under which developers can sell their iPhone applications through the App Store. I would like to share my opinions on the matter, coming from the perspective of a developer with experience bringing multiple commercial products to the handheld market.

Sales channels get your app out to the world

Sales channels make their living by taking an existing application and getting it in front of a vastly larger number of people than your company can. This isn’t just important to you: if you’re looking for an investor, they are going to know what sales channels you are going through. It’s the difference between a modest success and a blockbuster. If the sales channel does its job well you can hit a much larger market than you would ever get on your own.

Let’s take it as a given that you have a great product: no one can buy it if they haven’t heard about it. Sales channels can get the word out on your behalf and you don’t have to lift a finger. You can focus on your own marketing plans, or keep writing your code or whatever.

Sales channels take a slice of your pie

One of the biggest sales channels for handheld software is Handango, which takes a 40% cut out of all of your sales revenue, not including taxes.

This is not limited to handheld development, either. If you have seen Wil Shipley’s C4[1] presentation, he discusses the cost of working through sales channels, and why they are such a big deal, starting at around 1:04:40. The groups he worked with came out to around 50% just get your products to the sales outlets. The entire section is really worth watching if you are serious about getting your product out on the market.

Electronically Distributed Applications Have It Pretty Good

It gets even worse when you enter the field of physical distribution of goods. I have heard horror stories about the margins demanded by stores that stock items on shelves.

But enough hearsay — I have a friend that runs a specialized book publishing house, and when he sells books to dealers and stores, he receives 38%. That’s a 62% margin that the channel is taking.

We have it pretty good, all things considered.

App Store: a pretty damn reasonable deal

Great Exposure

Apple is willing to feature your application at the App Store. That’s right - someone is going to buy an iPhone and then start looking for some apps to put on that baby, and *your* app will be listed in their database.

If you have ever tried to get your application featured on a RIM- or Sony Ericsson-hosted ‘applications for your new phone’ site, you will realize what a huge, huge deal this is. Traditional companies require a vast amount of QA, frequently an expensive membership, and occassional, a sample of your brain matter, in order to get your application hosted on such a high profile and easy to find sales outlet.

Obviously, you’re going to be surrounded by a ton of other apps competing with yours, but that isn’t Apple’s problem, it’s yours.  You are still listed at the first site customers are going to look to for new software and that’s golden.

Reasonable Prices

The App Store will be taking a 30% cut of sales revenue on commercial iPhone applications. I’ve been hearing a lot of people grouse about this, and, on the other side of the fence, a lot of pro-Microsoft people jeering about this.

Let me set the record straight: as a sales channel, Apple has picked a very reasonable price (particularly considering that they charge nothing for handling free applications). Those that complain about a 30% commission are merely revealing that they haven’t tried to bring a serious commercial application to a large market themselves.

Sure, Apple’s Macintosh Products Guide can list your Cocoa application for free, but they aren’t hosting anything or brokering anything, they’re just providing a blurb about your product and a link to your site. All of the ecommerce headache still has to be handled somewhere, by somebody. Probably you.

In conclusion

Most of the people that I’ve heard complain about the 30% cut haven’t actually brought a handheld product to market. I agree that it might be nice to be able to sell products on other sites, but the only site I’d really be interested in doing that on is my own. Anywhere else is going to cost *at least* as much and wouldn’t get anywhere near the exposure or easy customer access that my applications will get at the App Store.

-Daniel

Daniel Pasco is the CEO and chief engineer of Brain Murmurs, Incorporated and has worked in handheld software development since 2004. During that time he has developed three commercial software products for the BlackBerry and one for the Sony Ericsson P900 series of smart phones. He is currently working on a iPhone task management application based on the Mentat web service.

He has still not gotten his code signing certificate from Apple and is concerned that it may miss him.

Filed under: Dan by Daniel