A real business update this time! Yesterday Apple launched the App Store Small Business Program. That’s good news for us and thus for you. Read along!
From 30% to 15%
You might or might not know that a Peak Pro subscription at 9,99 euro (or your local equivalent) ‘only’ makes us 5,78 euro. Theres’s 21% VAT and a 30% commission for Apple that we don’t get forwarded. Peak costs you guys 3,99 euro, which makes 2,31 for us.
Only when someone with a subscription stays with us for 12 (almost) consecutive months, the commission lowers to 15%. 5,78 euro becomes 7,02 euro, 2,31 becomes 2,80.
Apple gets a lot of criticism when it comes to that vast commission of 30%. Are you someone who plays Fortnite? Then you might’ve heard about the fact that Apple excluded them from the App Store because Fortnite tried to get around that 30% commission.
And if you might think that Google is friendlier, then guess again: they follow the exact same strategy as Apple does.
The Start-up Struggle
Recurring income is crucial to grow from a start-up over a scale-up to a, let’s hope, stable company.
With that 30% we get punished one year long by the Apple & Google duopoly. The same product with the same services delivers us 15% procent less revenue in year one compared to year two.
The hardest part for a start-up is to convince someone during 12 consecutive months to pay for that subscription: inherent to being a start-up, our product isn’t as ready as we want it to be. Because of that, a runner might only subscribe when working towards big goals, because (s)he might think that our app as is fails to deliver in the non-specific training period. When cancelling a subscription for one month, our counter again starts from zero…
When Apple gets sweeter
Yesterday Apple launched the App Store Small Business Program. We’re definitely a ‘small business’ according to their rules: less that 1 million dollar turnover from the App Store.
What does it mean? From January 1st, and if we get accepted, the commission drops from 30% to 15%. Starting on day 1 of a subscription, not on day 366. Because approx. 65% of our income comes through the App Store, that’s big news to us!
More specific
Let’s make some calculations: starting on 01/01/2021 a Peak Pro subscription brings us 1,24 euro extra per month. If we get that subscriber to stay for 12 months, that makes 14,86 euro.
Suppose we get 175 new Peak Pro subscribers via the App Store who we can engage for 12 months, that would make us 2 600,70 euro extra. Without additional costs, without additional effort. These are not staggering amounts, but they do mean a lot to us and you.
That extra revenue stands for almost exactly 4 development days. If we translate that to features, 4 days could mean a Polar import function OR the possibility to switch training sessions between different weeks OR the introducing of some stats in the app (for all those data nerds).
Developments which we now have to choose wisely, prioritizing them on what we think is best for revenue generation, can now (okay, not now as in today) be implemented faster thanks to the policy change by Apple. These developments will lead to a, let’s hope, better customer journey. The better the app, the more probable we make sales and the bigger the chance we live to see another day.
And if those 175 new Peak Pro subscribers become 500 and thus that 2 600 euro becomes more than 7 400 euro, we could produce some neat goal summaries like Strava does every year. Wouldn’t that be cool?
Maybe copy cat Google will follow the policy change now made by Apple. Will you cross your fingers for us? Thanks!
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