Thisarticlewas written byMatthew Guay,Capiches founding editor and former senior writer at Zapier.
Wake up with a great idea for a new widget.
You just made $10.
It’s free, every week, in your inbox.
Other marketplaces are similar; Etsy charges 5%, plus a bit more to list your product.
You make $8.41, and pay eBay + PayPal around 16% total.
Amazon has more customers, and people love free shipping, so you sell there too.
You might make only $5.69, sending Amazon 43% of your sale price.
If your widget was in a real store, perhaps more people would see it.
Youll pay slotting fees which average $1500 per store per SKU, estimatesTrax.
Thats enough to make Amazon sound cheap, until youre selling alotof widgets.
So you switch gears.
People like your widgets; maybe theyd read about how you built them.
You write a book, sell it on the Kindle and Apple Books stores.
Apple Books charges 30%.
Sell a $10 book, get $7.
Amazons Kindle storecharges 30%, but with conditions.
Your book must cost $2.99 to $9.99, and 20% less than any print copies.
It must be exclusive to the Kindle to get this rate in some markets.
Sell a $9.99 book, and you might get $6.69.
Dont meet those requirements, and Amazon charges 65% of your selling price.
Sell a $10 book, get only $3.50.
Spotifypays0.32 per play, Apple Music around 0.56.
Maybe an app would make more sense.
Sell your app for $10, get $7.
Games arent much different.
Sony, Microsoft, and Nintendoalso charge 30%.
Maybe a subscription makes more sense, with new digital widgets every month.
The first year, Apple and Google take 30% as before.
The second and thereafter, they take 15%.
So your $10/year subscription gets you $7 this year, $8.50 next year.
A $10 sell nets you $9.41.
And heres where it gets messy.
Paying for place
Its not like youre paying for nothing when selling products at retail.
Shelving, stocking, logistics and distribution, the electric bill and checkout staff, it all adds up.
You paid to put your product in front of real customers.
Shippings never actually free, neither are fulfillment centers and the fabled 1-click checkout.
Even credit card fees and affiliate cuts add up.
Plus, over 2 billion people visit Amazon sites each month.
Its worth paying a bit more to get in front of those people.
And if the math doesnt work, you could always go to one of their competitors.
You could pay less on eBay, Etsy, or with a Shopify or WooCommerce store.
Software downloads had already killed boxed software when Apple launched the App Store in 2008.
But that didnt mean software was easy to distribute.
It wasnt much easier on desktop.
And you needed to do it on your own.
The App Store covered all of that, for 30% of your selling price.
It could almost seem like a bargain, especially compared to dealing with phone carriers.
No licensing and accounts; Apple handled that for you.
Updates were easy; Apple pushed them to all your customers, automatically.
Customers like it, too, with payments only two taps away.
Then the cracks started showing.
The web, with all its complexities, started looking more appealing.
And they could live without either.
Subscription software businesses have to build a customer relationship, with unique accounts per-user.
Might as well build out payments while youre at it.
Accounts negate the need for license keys, and makepiracy a thing of the past.
A mobile app would be nice to have, with offline support and notifications and share menu integration.
Discovery in the App Store search would be nice, too.
Its not like youll have to build it on your own.
So came the workarounds.
Heres the funny thing.
Apples 15-30% cut on subscriptions isnt ideal for either developers or Apple.
The App Stores worth paying for.
Aggregator power
Apple seems to disagree.
The App Stores not just worth paying for, its worth paying 30% for.
Its their storefront, end of discussion.
Maybe the iPhones not for you.
The Kindle store, though, shows monopoly pricing power at what may be the extreme in digital retail.
The old king is dead, long live the only slightly more benevolent new king.
