From CrunchGear, a neat distillation of why some people fear and loathe Apple’s walled gardens:
if iPhone users decide that they want a refund for an app (users can get a refund within 90 days, according to Apple policy), Apple requires that developers give back the money they received from the sale. But here’s the kicker–Apple will refund the full amount to the user and says that it has the right to keep its commission.
For example, a refund at the AppStore of a $10 App means a developer has to return $10 to the customer, even though Apple only gave the developer $7 of the sale. The more you think about the possibilities, the more beautiful it becomes.
I’m going to go ahead and guess that Apple hasn’t dared enforce this provision.
Apple’s iPhone App Refund Policies Could Bankrupt Developers [CrunchGear]
Wow, yeah, I would think that would be a good way to kill your developer base.
The IPhone is surrounded by nasty provisions, though:
“UNLIMITED PLANS CANNOT BE USED FOR UPLOADING, DOWNLOADING OR STREAMING OF VIDEO CONTENT (E.G. MOVIES, TV), MUSIC OR GAMES.”, AT&T IPhone Unlimited Data plan (I love their use of all caps)
That would include the built in YouTube app on the IPhone right there. The device violates it’s own contract right out of the box.
Fun – more fodder for the fanboy v anti-fanboy battles.
I think this is a good move by Apple. As we all know, there is nothing they can do to curb developer and customer lust for all things iPhone. They’ve been screwing the customers for a while now, so it’s time to screw the developers. All is well.
Actually, before everyone gets their panties in a wad, you should realize that what Apple is doing is hardly unusual. Every merchant who accepts credit cards must live by the same rules. When a customer initiates a chargeback, your credit card processor not only takes the amount of the sale out of your bank account, you lose the 2-4% processing fee and the transaction fee. It sucks, but is standard practice in a wide variety of electronic transactions.
@KPS666
Spend more time with your Iphone calculator.
30% > 2%-4%
also
chargeback ≠return
Dude, “2-4% processing fee and the transaction fee” is not remotely close to “30% commission”
@Rob and others:
You’re missing the point. 30% is pretty steep and I suspect Apple will reduce it sooner or later, but draconian contracts like this exist in a variety of industries. In real estate, you can easily lose a similar percentage if you back out of a deal. Even in the “meager” 4% you lose to a credit card processor, that number can still be a lot of money in a large transaction.
In my own industry, a 20% commission is considered standard and 25% to even 40% is not unusual. And, yeah, you lose every penny of it if the client wants a refund AND you still have to refund the whole amount.
Is 30% a lot to lose. Sure, but lots of us live with that level of risk just fine. Quit whining.
Ok, 666 – In your swank, James Bond Real Estate world of high risk, high pleasure rewards, what sort of number would have caused your well manicured eyebrow to rise?
60%? 80%?
In ‘your own industry’, does your boss take a 30% commission, and they force you to refund the whole deal? Cause that’s what happening here.
@therevengor: “chargeback ≠return”
You’re quite right. A chargeback is worse than a return — in a chargeback your credit card processor takes the money back from you whether what you sold is returned or not. The processor doesn’t care about anything other than the fact that a chargeback was initiated, so whether the customer returned something, lost something or is even pulling a scam doesn’t change the fact that your processor pulls your money straight out of your account with no warning.
For example, a customer can claim an item was not received, file a claim with their credit card company and your processor immediately pulls those funds from you. If the dispute is ruled in their favor (and it typically is) the funds you lost are gone. It’s your problem to get the product back.
In fact, most credit card processors put a hold on your sale if it is particularly large or falls outside your typical pattern of sales activity. You then have to provide documentation of the sale sufficient to satisfy your processor that it is not a fraudulent transaction. Not only that, but the fees from the sale get pulled from your bank account immediately so until the funds are deposited you just made a negative sale and your customer has the product. This process can take weeks and even then, if your card processor is concerned that you will have insufficient funds to cover a possible chargeback, they can hold your funds for up to 90 days.
Bottom line: Yeah, 30% sucks but so do essentially all electronic transactions if things go wrong. As a merchant/vendor/whatever — you get screwed.
@therevengor: “Ok, 666 – In your swank, James Bond Real Estate world of high risk, high pleasure rewards, what sort of number would have caused your well manicured eyebrow to rise?
60%? 80%?”
Does it matter? I don’t see a gun put to your head to agree to a contract that takes a 30% commission. If you don’t like it, don’t agree to it and write apps for someone else. My point is that what Apple is doing may be draconian, but it’s not unusual across the board.
“In ‘your own industry’, does your boss take a 30% commission, and they force you to refund the whole deal? Cause that’s what happening here.”
Two words – real estate
Wow! Never knew there were so many contract lawyers on the internets!
Don’t be posting crap application to the store. If you trying to sale something that only half works, locks up and dies, then expect people to want their money back.
If you have a good product for sale, sure you will get a few returns, but not enough to matter. It’s not like there was material or shipping cost involved.
Good product = profit!
Shitty product = returns = loss!
Just who is complaining?
As Ars Technica notes, Apple basically doesn’t give refunds, so the point is pretty much moot.
As a point of reference, Kagi, a payment processor used by lots of indie software devs, takes around a 10-15% cut, and also hoses you when it comes to refunds.
So there you go: 30 > 10-15 > 2-4.
The problem with Kagi isn’t so much that they keep their cut, it’s that they can initiate the refund on their own. When they have no skin in the game, that can make them a little quick on the trigger.
I don’t know whether Apple initiates refunds in the same way.
@666-
I’m confused. Are you saying in your ‘james bond blah blah..”, you would be responsible to pay MORE money than you received if the deal falls through?
If that’s the case, that sucks. If not, how does it relate in any way? Each person is paying back what they received, not MORE. Which is not the case with Apple.
-KevinC