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iPhone App Refund Policies Could Cost Devs
CBRcrash writes "Apparently, 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. So, the developer not only has to return the money for the sale, but also has to reimburse Apple for its commission."
But either way, Apple is still providing a service here that both the developers and the consumers are using. Just because the consumer requires a refund doesn't make the cost of providing that service magically disappear.
if you don't take the piss, they'll keep coming back. if you do ... it'll catch up with you eventually.
...my opinion of them drops more and more. I think my opinion of them can't get worse, but they always manage to come up with some way. :\
I only hope that the devs are all quickly made aware of this and decide to do something to fix it, be that changing platforms, harassing Apple for a change, or whatever else works for them. There's no cause at all for devs to risk a loss of 30% of their initial charge per sale.
In my industry we call this double dipping.
that would suck for the makers of that Iamrich application.
http://www.iphonealley.com/news/039iamrich039-iphone-app-helps-you-achieve-%C3%BCber-snob-status-for-1000-removed
But either way, Apple is still providing a service here that both the developers and the consumers are using. Just because the consumer requires a refund doesn't make the cost of providing that service magically disappear.
So how does the developer of a pay application prevent someone from doing a DoS on the developer's bank account by asking readers of his blog to buy the app and get a refund?
I just got my sales reports for february (my first month) and I have one return. My app sells for $2.99 and I get $2.10 per sale. I was debited $2.10 not $2.99 on this statement so maybe this is not in effect.
cnet already looked into this and debunked it two days ago: http://news.cnet.com/8301-13579_3-10205293-37.html?tag=mncol;title
not in defense of apple, only that they are all equally evil.
So how much was the commission on the I am Rich" I guess he'd lose the most...
Come to think of it, it was discussed before, that most people don't use many of their apps after the first few days, maybe even first few hours.
So, let's say there's a game on your iPhone, what would be the expected total time to finish it and get bored with it? I bet less than 90 days. So you can basically have a free game: download, finish, refund. It's golden!
In the world of "proper" computers, when was the last time you could get a full refund for a software after 90 days? In digital downloads, I don't think it ever happened. Of course, most of the time the developer cannot be sure that the person didn't make a copy of the software and send back the original copy (that is controlled in the iPhone's little walled garden). But e.g. Steam would be similarly in charge of your software - and offer no such refund...
So, if it's in the contract, well, not much to do about it. If you get bitten (more refunds than sales) think again next time how you sell your app or maybe how to make a better one that peopel actually wanna keep! If still make money, give thanks to the mighty Steve that he let you keep some, and the users don't exploit the possibilities handed to them... ;)
Apple always wants to have its cake and eat it too. Apparently now it's the height of turtleneck fashion and style to take money away from a vendor because a customer is unhappy and changes his or her mind. Apple arrogance. What's the bet I'm modded flamebait, but if it were any other company I'd be modded insightful. If Apple wants to licence and control content, and forces this reimbursement policy on it's devs, Apple should have some moral obligation to return their share of the money too. Makes me sick.
These posts express my own personal views, not those of my employer
They're still extremely cagey about letting just any old riff-raff develop for their platforms, and still not realising at all that encouraging developers to write for their platforms in any way that they can is more than compensated for by people buying their products because of the applications available and the installed base it brings.
A 7/14 day cooling off period would be nice of apple to offer, but I agree that 90 days is far too long, the system will be gamed by people.
I run an online game and "chargebacks" are really annoying. How it works is that if someone calls their credit card company and says "I don't recognize this charge", Visa immediately removes the charge and debits our account the $13.95 monthly fee, plus a $25 "chargeback fee". We then have the opportunity to provide documentation that they really did sign up for the game.
If Visa then determines that the charge was legitimate, we get the $13.95 back (but not the $25.) If they determine that the charge was not legitimate, then we get neither back, and are charged an additional $25.
The worst that's happened is that someone used a bunch of stolen credit cards to create dozens of accounts over several months, always being careful to use open proxy servers. So we ended up with $1800 in chargebacks, and no way to stop them!
What we ended up doing was explaining the situation to everyone in the community, and when this guy contacted any of his in-game friends ("hey it's me, just had to create this new character") they would tell us and we would shut the account down right away and reverse any charges, but what a PITA!
Eventually this guy moved on, but we never did find him. Some social engineering indicated that he was from playing from internet cafes in Romania, but that's as far as we got.
Read the bottom of the article, the wording has been in the contract since day one. In addition Apple charges back the 70% not 100% in the event
the customer is even able to return it.
Got Code?
http://www.innerfence.com/google-shuts-down-infinite-sms
So, apparently Inner Fence are wrong? Lying? Or just plain incompetent?
Duh! It's the restocking fee of course...to offset the cost of putting that icon back among the others at AppStore.
1) Make every Apple staff buy an iPhone
2) Make every Apple staff buy as much 3rd-party iPhone App as possible
3) Request refund
4) ???
5) Profit!
If people are returning 7 out of 10 purchases, you still break even. If your software is getting 7 of 10 returns, it's either horribly broken or doesn't do what you say it does, so you shouldn't be getting paid, anyway.
After bricking unlocked iPhones, kicking applications off the iPhone store that might even slightly compete with iTunes in the far future, filing a wave of patents on basic well-known computer science and openly sodomising iPhone developers in the city square of Palo Alto, Apple Inc. today filed a Form 8-K with the Securities and Exchange Commission declaring that it was openly adopting Evil(tm) as a corporate policy.
"Fuck it," said Steve Jobs to an audience of soul-mortgaged thralls, "we're evil. But our stuff is sooo good. You'll keep taking our abuse. You love it, you worm. Because our stuff is great. It's shiny and it's pretty and it's cool and it works. It's not like you'll go back to a Windows Mobile phone. Ha! Ha!"
Steve Ballmer of Microsoft was incensed at the news. "Our evil is better than anyone's evil! No-one sweats the details of evil like Microsoft! Where's your antitrust trial, you polo-necked bozo? We've worked hard on our evil! Our Zune's as evil as an iPod any day! I won't let my kids use a lesser evil! We're going to do an ad about that! I'll be in it! With Jerry Seinfeld! Beat that! Asshole."
"Of course, we're still not evil," said Sergey Brin of Google. "You can trust us on this. Every bit of data about you, your life and the house you live in is strictly a secret between you and our marketing department. But, hypothetically, if we were evil, it's not like you're going to use Windows Live Search. Ha! Ha! I'm sorry, that's my 'spreading good cheer' laugh. Really."
http://rocknerd.co.uk
If the sale is canceled, why should they get to keep the profit?
If that wasn't the case, just get all your friends to buy stuff and keep the 'bonus' when they return it..
Sounds like AIG :)
---- Booth was a patriot ----
Since Android came out I've been cheerleading/fanboying for it. I own a G1, the 1.1 version of the OS is about to come out, and although there are many apps for it already it needs a lot more, and a lot of people who find the platform fun.
Android ought to be the platform you thought Apple used to be. No stupid rules, no Apple kowtowing, just write your code. If you don't like the way Android Market works (and it can't be as bad for developers as Apple's) then you can still publish your .apk file anywhere else you please online.
It's rare that you're presented with a knob whose only two positions are Make History and Flee Your Glorious Destiny.
from TFA:
"Let's say you sell a 99-cent app. You get 70 cents per sale. You sell 1,000 copies and make $700. Let's say your return rate is a whopping 3 percent (good God! Why are 3 percent of your customers returning the product?!). So you pay back $30; net $670.
and further...
Transaction fees for online credit card processing can run as high as 25 cents to 30 cents per transaction, plus a percentage of the amount. But consider the 99-cent application, the most predominant price used on the App Store.
A micropayment transaction (less than $10) processed by PayPal carries a 5-cent transaction fee plus 5 percent of the amount. Assume that Apple has negotiated a similar fee with its payment processors; it would therefore be charged roughly 10 cents on each 99-cent purchase, reducing its cut of that sale to 20 cents. If it were charged a similar amount for a refund, its cut would be down to 10 cents.
Obviously, Apple, with the biggest music store in the United States, processes an awful lot of small transactions and therefore probably gets some sort of attractive volume discount that's less than the example provided above. But that doesn't mean that it gets that service for free: processing transactions on the Internet costs money, whether you are Apple or Joe Developer.
Updated 4:00 p.m. - An Apple representative said the company's policy concerning refunds and developers is that when a refund is granted on a purchase made through the App Store, Apple returns the customer's money and debits the developer's account by 70 percent of the application price, or the revenue the developer had gained on the sale. The company does not charge the developer an additional 30 percent during the refund process, the representative said.
So it would appear that Apple is at least being as nice about this as all the other publishers, isn't creating any outrageous chargebacks, and has said this was their policy from day 1, two important things the submitter seems to have overlooked in their summary.
Any credit card purchase you make, if you take it back and get a refund, you get 100% of your money back. What happens to the 3-7% the credit card processor skims off the sale? The store doesn't get it back, the manufacturer doesn't cover the charge. The store loses that money, every time. Same thing here, Apple is just passing that small loss onto the developers. But I do see a difference, if you return an item to WalMart then WalMart (the store) eats the difference and Sony or whoever isn't affected. But with ITMS, Apple is providing the devs a service for that cut, whereas WalMart isn't providing Sony a service really. Apple believes that this tilts the burden of the loss to the devs. Also to be fair about it, the devs are chiefly responsible for the number of times their apps get returned. ;)
I work for the Department of Redundancy Department.
Old and inaccurate. Bravo for putting this on the first page.
it also occurs to me that you could view this as Apple issuing a chargeback the same as the credit card processors do. So apple gets a chargeback fee from their cc processors, and then issues an identical chargeback to the devs. Seeing as Apple is already having to pay for that chargeback they got, technically their chargeback to the devs should be larger, to cover the cost of the chargeback they are having to pay, plus the cost of the service rendered to the devs without profit. So I suppose in that respect, Apple is being generous about this?
I work for the Department of Redundancy Department.
with such a bullshitty draconian refund policy, developers wont risk their asses developing for your platform. brutal realities of business.
you either improve it, or fall behind android in regard to apps. your choice.
Read radical news here
Here is a counter article at Ars Technica: http://arstechnica.com/apple/news/2009/03/app-store-refunds-will-not-bankrupt-developers.ars
Jumpstart the tartan drive.
...it's been reposted to more websites.
I've debunked it several times now, and got bored of doing so, and instead just posted an article to my company website about it (because my company does iPhone development, and therefore would be directly affected were this true).
If you're too lazy to click through, the Cliff's Notes version is:
They told all of the developers that they were responsible to rewrite every thing in OSX and Apple was not going to help provide transition information.
Not to pick nits, but what? The Classic environment stuck around for ~7 (!) years, the Carbon API for longer. Apple provided plenty of transition, and transition information.
The decided to stop doing newbusiness in the early 90's with the small retailer
Bold text mine, they did not terminate their existing agreements with small retailers (many of whom are still around). Yes, they changed their business strategy, and that sucks if you're interested in getting into the small mac shop business.
On the subject of Mac clones, yes - that sucks for the clone makers, although from Apple's perspective whoever decided it was a good idea to allow clones should have realized that it would have done the damage it did to Apple's business. Even back then Apple was still a hardware company, that made the vast majority of their money on hardware. Clones cut directly into their primary revenue stream. Economically good for the end user, I suppose, but in the long run it would have driven a stake into the heart of the entity providing the software that actually set the platform apart from the herd.
And as to this particular article - it has been demonstrated in other comments and on other sites that this claim is categorically false. Apple refunds their commission to the person requesting a refund, and the developer refunds their 70% - so guess who actually loses money in a refund situation? Apple. They eat the credit card processing fees.
The secret to creativity is knowing how to hide your sources. - Albert Einstein
So according to this, if I had a competitor I don't want around I could just buy their app a lot and keep getting refunds until I bleed them dry? Sounds good to me.
This has apparently been debunked, so the story summary on the front page is not true. The editors need to update the summary.
What kind of disappointment could a customer have with a $1 iPhone app that results in them bothering to seek a refund? The fart sounds generated don't sound wet enough??
Starting cash: Customer 100, Apple 0, Developer 0
Sell game: Customer 0, Apple 30, Developer 70
Refund game: Customer 100, Apple 0, Developer 0
How in any way is this unfair again???
So, let's say there's a game on your iPhone, what would be the expected total time to finish it and get bored with it? I bet less than 90 days. So you can basically have a free game: download, finish, refund. It's golden!
Except that you can't. The contract between Apple and the developer says that _if_ Apple refunds the money then they get some amount back from the developer. However, you are a store customer, and that contract has nothing to do with you. The contract between _you_ and Apple says: No refunds.
I shit you not, if you make "too much" money, the processing companies will hold your money for up to 6 months - just because they can justify it with their terms of service.
You need a merchant account with a real bank. This is more work to set up, but your merchant bank account doesn't have to be controlled by the card processing service. When I did this, I used Bank of America. There are monthly charges, and you may have to keep a deposit (a CD, for example) in the bank as security. But the money goes into your account the day after the card is charged.
People in the "adult" industry have much tougher banking problems, because most of the big banks won't take their business. The terms from the "adult" credit card providers are much tougher, and many of them are ripoff outfits. (I once got a heated twenty minute lecture on this subject from a San Francisco bondage model and web site operator; she'd lost hundreds of thousands of dollars through troubles with an offshore "adult" credit card processor.) In that area, you do see multi-month holdbacks.
If you hate a merchant and want to stick it to them in your own petty way, don't refund a transaction, just charge it back. That way, no matter what the outcome is, they'll have to pay a non-refundable chargeback fee.
By the way, if you issue a refund with a normal merchant, they will not refund the transaction fee and in fact you will pay a second transaction fee for the refund! Only Paypal will refund the transaction fee.
In other words, what Apple is doing is the industry norm. Their transaction cost is higher than a merchant, but it isn't their fault your product sucks--all they do is manage your store.
But there is currently no way for your payment gateway to detect if somebody is an asshole. Somebody needs to work on that :-)
I'm sorry but when I read stuff like this I can just not understand how the OSS people still love this company. They have demonstrated continued lack of care for the community, whether it is non-replaceable batteries, massive DRM, third party developer shenanigans, special licensing chips in headphones to control third party markets, or whatever.
You guys do what you want but I will vote with my $$$. There will not be a single overpriced Apple product in my house, ever. No iAnything.
Don't charge for shitty apps.
the heading is wrong - only 70% is debited from developers
Hallowed are the Ori
By taking the blogger to court for tortious interference with his business.
Which country's court?
article is misleading Apple will only refund for a none delivered apps.
I once got a heated twenty minute lecture on this subject from a San Francisco bondage model
In other words, she tied you up in conversation?
8 of 13 people found this answer helpful. Did you?
So Apple rips off its developers to ensure that it receives a profit no matter what. So half the players of your game get tired of it after 3 months and demand refunds so that in essence they got to play it for free. When this happens Apple keeps all their profits and the developer has nothing. What happens if everyone eventually returns it for a refund? Do you pay Apple?
So why is this news, and why are you surprised?
If you ever had a reason to want to avoid the Apple monopoly App Store as a developer this is certainly a good one. Can you return music to iTMS that you don't like after 90 days as well?
And if you can return any App this easily, why was anyone complaining about the I Am Rich ripoff app?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
More proof that the current economic mess is in fact caused by a huge banking conspiracy.
Shitty apps and it shouldn't be a problem!
oogly boogly!
The App store needs a refund mechanism to allow consumers to return poor products for a full refund. To prevent too much abuse it needs a time limit, perhaps an hour.
This would allow consumers to try out several apps that are similar and pay for the best one. It would also allow them to try out a paid app to see if it is worth purchasing. Due to the abundance of poorly coded apps, I believe consumers are overly cautious toward purchasing good apps, and settle for the cheapest (we certainly are).
IMO, this would create a race to quality, instead of today's race to the cheapest. Over time developers would find it easier to sell quality apps for a reasonable price.
The downside is the extra server load on Apple's servers.
Sunfly (MBA)
WRONG.
I run a retail business and online processing.
1) .09c per transaction +~1-2% (not 3%)is nowhere near the 30% apple is making on the app. Even if its refunded and the fees double, its not that big a deal. even if 50% were refunded then you have at maximum 3% of sales at the upper bound of your total cc fees. In practice, only small fractions are refunded. And apple could always give store credits on refunds rather than crediting the bank account. This means apple is still making 27% margin after fixed external costs.
2) apple is a huge corporation and I have peaked into the kind of fees that large online stores negotiate with the cc companies for cheaper rates per transaction. its nowhere near 9c and its nowhere near 2%.
3) there is no physical inventory. Amazon sells for less than 5% on most inventory. Newegg as well. most small businesses make on average 10% OR LESS in gross margin. Apple is making 30% and probably getting cheaper rates than stores like amazon and newegg and has zero inventory warehousing costs. In fact, the amazon inventory database is likely a larger database in itself than apple's entire app store so even the computer/hardware costs to maintain it is cheaper
4) i don't know where you got the 3% number but your completely and literally just flat out wrong. Maybe your thinking about the paypal fees that small time ebay resellers pay?
5) If apple wanted, they could give customers AP accounts in queue up customer purchases so rather than billing each app one at a time they could bill each app purchased in a 1 month period. or they could force you into purchasing credits first prior to buying the app in chunks. or whatever they wanted. This would eliminate the per transaction fees and lower their percentage of interchange fees.
6) everything you just said above is just plain wrong. Micropayments are not doomed to failure, you just have no idea what your talking about. Sure, sufficiently large quantity and sufficiently small transactions without buying credits in bulk are doomed to failure, but apple's price points and margins are NOWHERE near this threshold.
"Just in Time to respond to the World Financial Crisis:
Work-At-Home for Apple! No experience necessary!!
App Store is looking for a lot of part-timers.
Easy work: Just buy a computer game from EACH of our Store's vendors, wait a random amount of time; then return it for a full refund.
Every time you complete a cycle, you receive 49% of our handsome Apple Store commission!
'sure beats stuffing envelopes!!!
Apply Today!!!" :-) Satire, folks...
Nothing to see here...
Move along... :-/
I'm an Apple prick, yes it's true,
I explain how getting fucked is good for you.
I come on Slashdot and spread my shit,
Because Steve Jobs says I'm good at it.
I'm an astroturfer, look at me,
I visit Slashdot on bullshit sprees!
If Apple killed children I'd say "That's fine,
Apple knows better, children should die!"
The world's burning. Moped Jesus spotted on I50. Details at 11.
Does slashdot ever correct obviously wrong stories like this?