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Cellphones Businesses The Almighty Buck Apple

iPhone App Refund Policies Could Cost Devs 230

Posted by Soulskill
from the money-for-nothin dept.
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."
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iPhone App Refund Policies Could Cost Devs

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  • by Anonymous Coward on Saturday March 28, 2009 @07:24AM (#27369389)
    From the article:

    Apple charges a 30% commission on all paid apps sold through the App Store. So basically, developers get 70% of a given sale but if the end-user wants a refund, the developer has to pay Apple 100% of the sale.

    We are assuming that Apple still has to pay bank fees on a charge if a consumer wants a refund, but certainly bank charges don't amount to 30 percent.

    The point is that the charges are unfair.

  • by superid (46543) on Saturday March 28, 2009 @07:32AM (#27369423) Homepage

    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.

  • by Anonymous Coward on Saturday March 28, 2009 @07:32AM (#27369437)

    cnet already looked into this and debunked it two days ago: http://news.cnet.com/8301-13579_3-10205293-37.html?tag=mncol;title [cnet.com]

  • by Anonymous Coward on Saturday March 28, 2009 @07:32AM (#27369439)
    not in defense of apple, only that they are all equally evil.
  • by SausageOfDoom (930370) on Saturday March 28, 2009 @07:50AM (#27369497)

    I'd normally be the last person to defend Apple, but to be fair to them it appears the only time a customer can claim a refund is when the developer doesn't release in time, or releases a broken product. Which makes it sound a bit more reasonable.

  • by peragrin (659227) on Saturday March 28, 2009 @07:54AM (#27369511)

    shh don't tell that to /.'ers. they don't know how businesses work or their expenses so they think that apple is evil.

    What people really don't understand is that credit card companies double and sometimes triple dip.3% of that $2.99 went to the credit card company. or $.09 since it was a refund they still charge for the transaction. So now it is $.18 Currently Apple has $.89 that is disappearing. Now if there was an error in apples transmission to the credit card company that gets charged too(1 in 20 or so)., and that is just credit card charging fees.

    Apple isn't keeping their share either that too gets refunded. however since slash-dotters aren't lawyers they can't read the legalese that states that.

    Micropayments are doomed to failure as they will never be cost effective as the transaction charges are more expensive than the payments. Of course since users never se those charges they don't understand them.

  • Myth: RTFA (Score:5, Informative)

    by codepunk (167897) on Saturday March 28, 2009 @07:57AM (#27369537)

    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.

  • by malice (82026) on Saturday March 28, 2009 @08:13AM (#27369611) Homepage

    This is all fairly silly... Apple does not keep the 30%: [cnet.com]

    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.

  • by xant (99438) on Saturday March 28, 2009 @09:13AM (#27369861) Homepage

    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.

  • lets do the math (Score:5, Informative)

    by v1 (525388) on Saturday March 28, 2009 @09:19AM (#27369887) Homepage Journal

    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. ;)

  • by fractoid (1076465) on Saturday March 28, 2009 @09:58AM (#27370101) Homepage
    Are you insane? O.o if I wholesale a shirt to K-Mart, they sell it and the customer brings it back, I'll refund them what they paid me. There's no way in hell they get their retail price (double or more the wholesale price) out of me though!
  • by ConfusedVorlon (657247) on Saturday March 28, 2009 @10:35AM (#27370297) Homepage

    not true.

    I get 85-90% of all my sales (on Palm software) that I make through Mobihand.com

    they provide a similar service to the appstore;
    catalogue
    payment processing
    first line support

    of course they don't have the store on the device - and they don't take 3months to approve my apps.

    not that I resent the 30% that apple charge. I actually think it is a fair rate for the excellent job they have done in encouraging users to access and buy apps.

  • by Professor_UNIX (867045) on Saturday March 28, 2009 @10:59AM (#27370439)

    Releases through any other publisher are not refundable except for exchange for the exact same product (i.e. you got bad discs, you can take it back and get the same piece of software). What stops someone from buying the software and then getting a refund on it and pirating the software otherwise? The only store I ever remember allowing software returns for cash was called Microcenter and they stopped allowing open-box software returns years ago.

  • by GarryFre (886347) on Saturday March 28, 2009 @11:01AM (#27370453) Homepage
    Few users really would bother to go through the process of claiming a refund weeks after unless the program is severely flawed. Often the time involved isn't worth it, or they have asked for a refund sooner than that. If it's really a glaring fault, the maker will probably be on making an upgrade for it. However My opinion has dropped due to the difficulty of programming for iPhone. It is so frustrating as to bring me to tears literally. One is forced to scatter like tasks all over the place instead of having it in one place. To resize a font or to make it bold has to be done in code instead of interface builder, which means you have to align things in a funky manner to compensate for it. I is very impressive in some ways and exhaustingly depressive in others. In short, bugs are often caused by the system instead of the programmer, and yet it's the developer who has to foot the entire amount of the bill for this.
  • by gnasher719 (869701) on Saturday March 28, 2009 @11:21AM (#27370557)

    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?

    By taking the blogger to court for tortious interference with his business. See Wikipedia: http://en.wikipedia.org/wiki/Tortious_interference [wikipedia.org] or google for any other sources.

  • by wurp (51446) on Saturday March 28, 2009 @11:27AM (#27370593) Homepage

    Same here. Feb was my first month, selling for $1.99, one return. I was debited $1.40, the same that I am credited for a sale.

  • by Richard_at_work (517087) <richardprice AT gmail DOT com> on Saturday March 28, 2009 @01:30PM (#27371621)
    Actually you will find that any large retailer will pass the full POS charge of the refund or return on to the manufacturers distributor, and they will pass the charge back to the manufacturer. Yes, I have seen it done in several large chains that way. Its marked as the handling charge.
  • by TheUser0x58 (733947) on Saturday March 28, 2009 @04:04PM (#27372927) Homepage
    If returns are allowed, Good apps will get returned almost as often as poor apps.

    Um, why? Because people are satisfied with good apps and want to continue using them? And they are unsatisfied with poor apps and have no reason for them to be on their phone?

    What's more likely is some people buy an app, 'back it up', return it for a refund, and find some hack or backdoor that permits them to still use the app.

    How is this at all likely? If you can afford a $200 phone + $70-$90/month contract, why would you waste your time "stealing" a $1-$5 app in this way? Sure, some people will do this, but I can't imagine this being common enough for Apple or 3rd party developers to care very much.

  • by Anonymous Coward on Saturday March 28, 2009 @11:24PM (#27376255)

    There was no change - the language in the referred to segment of the contract has not changed. It was exactly the same under the last agreement, and I believe it has been this way since the app store opened.

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