Developer Tooling
Xcode is a full-featured, world-class developer tool — compilation & build, debugging, documentation, distributed build, performance diagnostics, crash analysis, and whole load more.
If you look across the industry, there are only a few competitors that come close to the quality & feature richness: Microsoft’s Visual Studio, and JetBrains IntelliJ. Sure, theres also Android Studio, but thats IntelliJ licensed as part of the Google Play developer fee ($25).
| Product | Monthly Cost per Engineer |
|---|---|
| IntelliJ | $14.90 |
| Visual Studio Professional | $45 |
These seem like reasonable alternatives to gauge pricing.
Ultimately, outside of the small indie w/ no-revenue, these are effectively rounding errors to any other costs. Even then, those costs are not prohibitive, and offer student/learning editions for free.
This starts our cost tab per month at $30.
App Delivery / Hosting
You’ve built your app using the purchase tools, now you need to deliver it. To do that you need:
- Hosting of the product page including the promotional images & videos
- Last Mile QA (aka App Review)
- CDN costs for end user downloads of the app itself
Sure, Last Mile QA is debatable (If you’re just putting it on the internet, why do you need a review?), but every developer has submitted something that didn’t work / crashed during app review.
How much do these items cost?
Product Page Hosting
App store pages include text, images, and video. Depending on the app these pages may get significant traffic. Ideally, you don’t want to have to manage this, so you’ll contract out.
Most simple eCommerce pages offer a low-cost, unlimited hosting with up to 30 of video.
| Service | Hosting |
|---|---|
| Squarespace | $16 |
| WIX.com | $14 |
| WordPress | $8 |
| Average | $14 |
Because the App Store product listing pages include review comments, we’ll need content moderation service – $1/thousand text reviews through Azure Content Moderator.
This gives us an approximate cost of $15 a month for a product page.
Last Mile QA
Assuming that it takes a skilled QA engineer 2 hours to review you app, as well as the tooling/support for supporting that engineer (e.g. App Store Connect on the other side).
How much does a QA engineer cost? According to salary.com, the 90th-% cost/hr is $52. Lets hand wave, and suggest that on an annual basis the cost of supporting the tooling is $10 a month for some sort of App Store Connect thing.
We’ve got an additional $114 added to our tab.
CDN Costs
There are many ways to skin this cat. Taking a conservative approach, and calculating the average cost Azure, AWS, and Google Cloud’s CDN delivery costs, across all regions, multiplied by the number of downloads & size of the app binary size. Binary size was picked from the app store product page for the app.
Looking across the top apps in the app store, we get a Median cost of $0.02 per download. Pretty cheap!
But how many downloads does a top-tier app get? At the time of writing, the top free app was Wordle!. According to Sensor Tower’s stats, this is 3,000,000 downloads a month. With an app binary size of 127.4mb thats $41,057 in CDN costs. For a free app. Its starting to look spendy.
The median cost for the top apps is $46,581.
Purchasing
Accepting credit card costs is not low-cost — the cost / challenges of performing the transaction itself are not insignificant. And thats before we get into the requirements for tax collection, remittance, refunds, fraud.
Lets take a look how much it might cost for an almost turn-key solution through Stripe:
| Item | Cost |
|---|---|
| Credit Card Processing | 2.9% + $0.30 / 1.4% + €0.251 |
| Billing | 0.5% |
| Tax Mangement | 0.5% |
| Fraud Management | $0.07 |
These are the raw transaction costs that stripe offers. One has to assume that for someone like apple to turn this into a completely turn-key solution there would also be a markup. But for now, lets say it’s just the raw costs - 2.9% + $0.37 per transaction. (1.4% + €0.25 in the EU)1
Then you get into mandatory work & processing for any legitimate business – taxes. It’s non-trivial to collect, process, and pay taxation in a single country. Thats before you cross international borders, and transact in multiple currencies. Multi-nationals already do this, but smaller companies do not. But someone has to do it. Stripe charges 0.5% fee to tran
Median purchase price of apps that charge for ‘download’ is $1.23, and the median of the lowest-cost-IAP is $0.99. That gives us $0.41 for download, and $0.40 for an IAP. Thats a lot more than 30% flat fee.
Clearly this isn’t a complete story of the purchase costs – at median prices, the fixed cost dominates the overall transaction.
If we look at some top apps with significant monthly fees (e.g. Streaming Video), we can see they fair a little better with costs around 4% of the IAP cost.
The EU places a cap on credit card merchant fees. ↩ ↩2