PSA: How App Store prices work
DNA3000
Member, Guardian Guardian › Posts: 19,640 Guardian
Rarely do I do this, but I feel compelled to in this case. A Youtuber recently uploaded a video basically asking the question: why are people outside the United States paying so much for in-app purchases? They claimed to have copies of communication with Apple where Apple stated that the prices you pay are set by the developer and not Apple. Their point was that Kabam says the higher overseas pricing is not set by them, while Apple says it is set by them, so someone must be lying. In fact, both are telling the truth, and you have to understand how App Stores work to understand what's going on.
This has all been discussed before, on the forums, on the Reddit, but it keeps coming up. This is all also freely available information, so I don't know *why* it keeps coming up. Anyone can learn how this works via publicly accessible information. It is not like the Apple and Google App stores keep the way their developer programs a secret, nor could they with millions of developers out there. In my opinion, the Youtuber in question should have done basic research on this before stirring controversy on this subject, especially when it has been discussed before more than once. Because I've been asked about it more than once, I think it is appropriate to go through this all again.
I'm more familiar with Apple, but my understanding is the Google Play app store works more or less identically, so while I will refer to the Apple store, this all should be the same for both major mobile app stores.
Its clear from the context of the communication highlighted in the video that the person at Apple was a level one-ish customer support person that either did not understand the question or is not familiar with how App store pricing works, thus their vanilla answer "the developer sets the prices." Here's how it actually works.
An Odin costs $99.99 in the US. Kabam does *not* set that price directly. Of course, they know how much money they want, but they way they do this is they go to their Apple Developer price tier chart and look at the US region pricing chart. Based on the most recent version of the chart I have, this is a tier 60 item. *That* is what they set. Kabam tells Apple that an Odin is a tier 60 item. In that sense, Kabam is "setting the price" for an Odin. But then Apple's app store takes over.
What's the price for that Odin in Australia? According to Apple, a tier 60 item is $159.99 AUD. Apple determines the price for that item in Australia based on the fact that it is a tier 60 item. Apple decides what the conversion is, and that is based on a number of factors for Apple: not just the currency conversion rate, but their own cost of doing business in that region, the currency fluctuation risk, and all sorts of other factors. Point being, Apple can say whatever they want about what their cost of operations is in Australia, We don't know what that is, nor does Apple tell us. Apple simply says that in Australia the item will cost $159.99 AUD, even though the direct currency exchange would imply it should cost about $131 AUD.
What's more, you might think Kabam is making way more in Australia because of this system. After all, Apple is charging about 22% more than the currency exchange rate would imply. Is Kabam also making 22% more? Actually, not really. In the US, a tier 60 item costs $99.99 and Kabam makes $70.00. That's the so-called "30% Apple cut," But what does Kabam make on a tier 60 item in Australia? The Apple Price tier list tells you:
According to the latest version of the tier list I currently have, Apple charges $159.99 AUD and the developer makes $101.81 AUD from that sale. At today's exchange rate, that's about $77.60 as I write this. It is a little more, but in Australia the developer is making only 101.81/159.9 ~= 64% of the revenue. Apple is taking 36%. Kabam is making about 10% more on Odins in Australia, while Apple is making 48% more on every Odin (Apple makes about $30 on an Odin in the US, but in Australia they make $58.18 AUD which is about $44.35 US - that's almost 50% more than the $30 they make on US Odins).
But, you might ask, why can't Kabam say that the item is a tier 60 item in the US, but a tier 57 item in Australia, so that the price comes down? Can't they just work backwards, figure out that Australians "should be" paying about $130 AUD and then set the tier accordingly? Nope: Apple doesn't allow that. Two separate rules combine to prohibit this. First, every in-app purchase item must have one and only one price tier. There's no way to set different tiers for different countries. The API simply has no way to do it. It isn't even a thing that Apple developers are directly told. Since there's no way to set more than one tier, developers don't have to be told you can't set more than one tier.
A tricky developer could try to work around this by offering "US Odins" and "Australian Odins" and set the US Odin price to one thing and the Australian Odin price to something else. Apple developers have in fact attempted to do this. However, this runs afoul of a separate rule, which I will quote here:
Without some special reason or exemption from Apple, you can't sell different versions of the same item in different countries. If you sell Odins, you have to sell Odins everywhere, and that Odin must have one specific price tier, and the Apple App store then determines what the actual cost of that item is in every region Apple operates an App store based on their current price tier sheet, which is updated monthly.
So: does Kabam set the price for Odins, or does Apple? Actually, it is both. Kabam sets the price tier for Odins. That is 100% under their control. But Apple sets the cost that people in each country pay. That is 100% under Apple's control, and Kabam has zero say in it. They cannot set different prices in different countries, nor can they sell customized versions of the items with different prices in different countries.
As always, there are exceptions, corner cases, special circumstances, and Apple can do whatever it wants to on a case by case basis. But these are the rules Apple makes developers play by, and the Google Play store does similar things.
This has all been discussed before, on the forums, on the Reddit, but it keeps coming up. This is all also freely available information, so I don't know *why* it keeps coming up. Anyone can learn how this works via publicly accessible information. It is not like the Apple and Google App stores keep the way their developer programs a secret, nor could they with millions of developers out there. In my opinion, the Youtuber in question should have done basic research on this before stirring controversy on this subject, especially when it has been discussed before more than once. Because I've been asked about it more than once, I think it is appropriate to go through this all again.
I'm more familiar with Apple, but my understanding is the Google Play app store works more or less identically, so while I will refer to the Apple store, this all should be the same for both major mobile app stores.
Its clear from the context of the communication highlighted in the video that the person at Apple was a level one-ish customer support person that either did not understand the question or is not familiar with how App store pricing works, thus their vanilla answer "the developer sets the prices." Here's how it actually works.
An Odin costs $99.99 in the US. Kabam does *not* set that price directly. Of course, they know how much money they want, but they way they do this is they go to their Apple Developer price tier chart and look at the US region pricing chart. Based on the most recent version of the chart I have, this is a tier 60 item. *That* is what they set. Kabam tells Apple that an Odin is a tier 60 item. In that sense, Kabam is "setting the price" for an Odin. But then Apple's app store takes over.
What's the price for that Odin in Australia? According to Apple, a tier 60 item is $159.99 AUD. Apple determines the price for that item in Australia based on the fact that it is a tier 60 item. Apple decides what the conversion is, and that is based on a number of factors for Apple: not just the currency conversion rate, but their own cost of doing business in that region, the currency fluctuation risk, and all sorts of other factors. Point being, Apple can say whatever they want about what their cost of operations is in Australia, We don't know what that is, nor does Apple tell us. Apple simply says that in Australia the item will cost $159.99 AUD, even though the direct currency exchange would imply it should cost about $131 AUD.
What's more, you might think Kabam is making way more in Australia because of this system. After all, Apple is charging about 22% more than the currency exchange rate would imply. Is Kabam also making 22% more? Actually, not really. In the US, a tier 60 item costs $99.99 and Kabam makes $70.00. That's the so-called "30% Apple cut," But what does Kabam make on a tier 60 item in Australia? The Apple Price tier list tells you:
According to the latest version of the tier list I currently have, Apple charges $159.99 AUD and the developer makes $101.81 AUD from that sale. At today's exchange rate, that's about $77.60 as I write this. It is a little more, but in Australia the developer is making only 101.81/159.9 ~= 64% of the revenue. Apple is taking 36%. Kabam is making about 10% more on Odins in Australia, while Apple is making 48% more on every Odin (Apple makes about $30 on an Odin in the US, but in Australia they make $58.18 AUD which is about $44.35 US - that's almost 50% more than the $30 they make on US Odins).
But, you might ask, why can't Kabam say that the item is a tier 60 item in the US, but a tier 57 item in Australia, so that the price comes down? Can't they just work backwards, figure out that Australians "should be" paying about $130 AUD and then set the tier accordingly? Nope: Apple doesn't allow that. Two separate rules combine to prohibit this. First, every in-app purchase item must have one and only one price tier. There's no way to set different tiers for different countries. The API simply has no way to do it. It isn't even a thing that Apple developers are directly told. Since there's no way to set more than one tier, developers don't have to be told you can't set more than one tier.
A tricky developer could try to work around this by offering "US Odins" and "Australian Odins" and set the US Odin price to one thing and the Australian Odin price to something else. Apple developers have in fact attempted to do this. However, this runs afoul of a separate rule, which I will quote here:
Without some special reason or exemption from Apple, you can't sell different versions of the same item in different countries. If you sell Odins, you have to sell Odins everywhere, and that Odin must have one specific price tier, and the Apple App store then determines what the actual cost of that item is in every region Apple operates an App store based on their current price tier sheet, which is updated monthly.
So: does Kabam set the price for Odins, or does Apple? Actually, it is both. Kabam sets the price tier for Odins. That is 100% under their control. But Apple sets the cost that people in each country pay. That is 100% under Apple's control, and Kabam has zero say in it. They cannot set different prices in different countries, nor can they sell customized versions of the items with different prices in different countries.
As always, there are exceptions, corner cases, special circumstances, and Apple can do whatever it wants to on a case by case basis. But these are the rules Apple makes developers play by, and the Google Play store does similar things.
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Comments
Edit: by clicking on this video, you will be giving Prof Hoff views, so proceed with caution
This is literally the first thing that comes up in Google. It might not be the first hit for everyone, but I suspect it will be very high in the search list for most people. From there, further reading and investigation would lead you to basically all the rest of the information I mention above.
As I said, this is not super secret information. It is just something most people don't know, because most people aren't exposed to different currency pricing in the major app stores, so most people don't even think to ask.
But if someone is wondering, I would hope they would get at least this far.
And that was an amazing read.
If you're going to wade into a controversial topic, I believe you owe it to your readers/viewers/listeners not to send them on a crusade for no reason, and in this case I believe players are getting angry for no valid reason, such that they may not have the time to do all the research themselves to reveal. Hopefully this information reaches them so they have one less thing to get worked up about.
I can beat up on Youitubers any day of the week. I usually only come to the forums on weekends when I'm stuck at work or when I think some really important thing needs to be discussed for the benefit of the players. I think this is one of the latter, because the list of things Kabam does wrong is plenty long enough that we shouldn't be blaming them for things completely beyond their control. We should focus on what they can fix, and by extension we can convince them to fix, rather than things they cannot fix, and thus we can only waste our time on ourselves for zero benefit.
This person thinks Kabam likes to make all their prices end in 9s. Of course, when it comes to USD pricing, all App Store prices end in 9s, because every price in the tier list ends in 9s.
Also, I'm pretty sure this is set by retail convention. Which is to say, in the US it is common for prices to end in "99." But in Japan all the App store prices end in zero, because in Japan they don't have the same tradition of prices ending in 9s. In Singapore, I believe all App store prices end in 8, because there it is more culturally appropriate for retail prices to end in 8 than 9 or 0 ("8" is a good luck number in Chinese culture). And again, this is all mandated by Apple (and presumably Google).
So Apple doesn't just perform the currency conversion, then apply a risk adjustment, then apply a cost of business adjustment. They also very explicitly make the price tiers visually palatable to the region they are in. They put a significant amount of thought into exactly how the price tiers work.
Heck for more reference on the difference Minimum wage is 19.84 an hour so that is even more cost for Apple being here as well. Just the staff would be so much more for them.
All those things add in to higher cost. Without raw data, I would still safely say apple would work on a lower profit margin here than the us because of that extra cost, but can't verify if that is true. So while it does annoy me, I can at least see why.
That means, before taxes (which are out of the control of both Kabam and Apple) Australians are paying about 110.86 USD at current exchange rates. That's still 10% higher than the native US price, but it is much closer and leaves less to account for cost of business differences between the two regions.
Moreover, in the last 12 months the currency exchange rate between AUD and USD has fluctuated by about 14%. So a 10% higher price in an environment where the exchange rate can fluctuate by 14% should not really be all that noteworthy.
https://www.avalara.com/vatlive/en/country-guides/oceana/australia/australian-gst-electronic-services.html
It is a shame those guys can no longer flag the post. Because it would be wrong of me to tag every Kabam employee and say "please read my posts" but when angry people used to flag them all, it forced Kabam to read all my stuff. Especially the most interesting and controversial posts. You can't buy that kind of visibility.
Now, they are forced to stand there and push the close door button in the elevator repeatedly not realizing the button isn't connected to anything. Because at this point, I'm pretty sure nobody cares who flags my posts with disagrees. Nobody who thinks I have credibility cares, and nobody who dislikes me is going to dislike me more due to disagrees. And when every single post suddenly gains exactly one disagree, it ends up looking kind of lonely, like a single person standing by themselves in the rain protesting something with a sign no one can read and chanting things no one can understand.
In particular, I don't really care, because I can't care. I have no idea what an anonymous disagree flag means, on one post much less a series of them. Without some additional piece of information, it could just as well be a forum software glitch. Whoever you are, if I don't know why you're disagreeing, your disagree is meaningless.
Not saying there's likely a rational reason here, given they are flagging posts about Australian tourists, but still.