Apple & Google Subscriptions: Is the Higher Commission Worth It?

What Payment Options are Available?

  • Apple App Store. Apple takes a commission of 30% on all payments processed through their ecosystem — making them the most expensive option. However, many of our clients negotiated at the rate of a 15% commission
  • Google Play Store. Google will charge 9–10% of all payments processed, depending on the nature of the app and other criteria.
  • PayPal. Accepting payments through PayPal will cost you 2.9% of the transaction plus a flat $0.30 on each transaction.
  • Stripe. This is very similar to PayPal, charging 2.9% and a flat $0.30 per transaction.

How Do Payments Work for Mobile Apps?

  • Subscriptions. The most common way that users pay is via a subscription. This is when a user pays regularly on a weekly, monthly, or annual basis for the usage of the app. Typically, the payment processor will store the credit card details associated with that account and the transaction will go off automatically. This auto-renewal reduces friction and helps you to maintain more recurring revenue over time.
  • Once-Off Payments. Users can also buy your app outright by making a once-off payment. This is great for apps with a single value proposition where the customer doesn’t expect continual development and improvement.
  • Coupons. Another way that apps can work is by using coupons. Companies can seed the marketplace with coupon codes that are obtained elsewhere — which can then be redeemed in-app. This can be useful in various situations where the transaction is not a direct one necessarily.

How Should I Decide Which Payment Model to Use?

  • Entertainment Apps. Apps like Netflix which rely on constant updates and additions to the catalog best suit subscriptions which can be done across any of the different gateways.
  • Productivity Apps. If your productivity app is going to get consistent updates then a subscription might be best, but if it’s simply a utility that will remain the same — it’s probably better to do once-off payments which can be done through any gateway.
  • Utility Apps. These are typically once-off purchases because they have a singular and well-understood value proposition. Stripe, PayPal, and the like can be a good option here.
  • Gaming Apps. Games often use in-app purchases which are better suited to existing ecosystems like iOS and Android — because there is much less friction in the moment.
  • Education Apps. Assuming that your curriculum and resources are going to be changing over time, subscriptions are often a good option here — even if they have a finite end date to align with examinations or something similar.

How Should I Think About Merchant Accounts?

When you stay outside the iOS and Android ecosystems, you’ll need to consider how to access a merchant account. If you don’t have one yet, your best option would be to use a gateway that creates one automatically for you upon registration (like Stripe or PayPal). It’s worth noting that you do pay quite a high commission here which can be painful if you’re a merchant with a large customer base and high product turnover.

So, Who Do I Choose?

Essentially, after taking everything above into account — here is how we think about it:

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Sunflower Lab

Sunflower Lab

We are a fast-growing, award-winning digital product and innovations agency with offices across North America.