Apple & Google Subscriptions: Is the Higher Commission Worth It?
iOS
When you’re trying to build an app with a sustainable business model, one of the most important decisions that you have to make surrounds the payment method that you select. This can make or break your chances of success and have a significant impact on the scale that you can achieve.
In this article, we’re going to explore the different payment methods available and how you can select the best one for your particular situation.
What Payment Options are Available?
Let’s start by laying out the current ecosystem so we know what our most common choices are:
- Apple App Store. Apple takes a commission of 30% on all payments processed through their ecosystem – making them the most expensive option. However, many of our clients negotiated at the rate of a 15% commission
- Google Play Store. Google will charge 9-10% of all payments processed, depending on the nature of the app and other criteria.
- PayPal. Accepting payments through PayPal will cost you 2.9% of the transaction plus a flat $0.30 on each transaction.
- Stripe. This is very similar to PayPal, charging 2.9% and a flat $0.30 per transaction.
The natural question is whether the higher prices are worth it? And this can only be answered when we take into account the other factors that play a role in a sustainable and compelling proposition for your customers.
How Do Payments Work for Mobile Apps?
When designing your payment process, you also need to choose between a variety of different payment models that will determine how your users get charged for the mobile app they are using. Here are some of the more common ways this happens:
- Subscriptions. The most common way that users pay is via a subscription. This is when a user pays regularly on a weekly, monthly, or annual basis for the usage of the app. Typically, the payment processor will store the credit card details associated with that account and the transaction will go off automatically. This auto-renewal reduces friction and helps you to maintain more recurring revenue over time.
- Once-Off Payments. Users can also buy your app outright by making a once-off payment. This is great for apps with a single value proposition where the customer doesn’t expect continual development and improvement.
- Coupons. Another way that apps can work is by using coupons. Companies can seed the marketplace with coupon codes that are obtained elsewhere – which can then be redeemed in-app. This can be useful in various situations where the transaction is not a direct one necessarily.
All of these methods can be achieved through any payment processor but some are better suited than others. The iOS and Android ecosystems are built for the subscription model because they have all the customer’s payment information on file – making it easier for them to buy the app without friction. Stripe, PayPal, and others don’t have as strong a relationship with the users and therefore are better suited for one-off transactions.
How Should I Decide Which Payment Model to Use?
Choosing the right payment model for you is going to depend on the category of app that you’re developing. Let’s look at how different categories affect the suitable payment model:
- Entertainment Apps. Apps like Netflix which rely on constant updates and additions to the catalog best suit subscriptions which can be done across any of the different gateways.
- Productivity Apps. If your productivity app is going to get consistent updates then a subscription might be best, but if it’s simply a utility that will remain the same – it’s probably better to do once-off payments which can be done through any gateway.
- Utility Apps. These are typically once-off purchases because they have a singular and well-understood value proposition. Stripe, PayPal, and the like can be a good option here.
- Gaming Apps. Games often use in-app purchases which are better suited to existing ecosystems like iOS and Android – because there is much less friction in the moment.
- Education Apps. Assuming that your curriculum and resources are going to be changing over time, subscriptions are often a good option here – even if they have a finite end date to align with examinations or something similar.
This list is not exhaustive but it gives you a sense of how the categories affect which payment method you should be considering.
How Should I Think About Merchant Accounts?
When you stay outside the iOS and Android ecosystems, you’ll need to consider how to access a merchant account. If you don’t have one yet, your best option would be to use a gateway that creates one automatically for you upon registration (like Stripe or PayPal). It’s worth noting that you do pay quite a high commission here which can be painful if you’re a merchant with a large customer base and high product turnover.
If you’re launching a large marketplace with lots of daily transactions, it’s probably more cost-effective to choose a gateway that doesn’t have an attached bank account. You’d have to obtain your own one, but it would reduce your cost. Some of the most popular options here are SagePay and PayPoint. You’ll need to spend some time and effort configuring these – but you’ll save on the high commissions you would have paid someone to do it for you.
So, Who Do I Choose?
Essentially, after taking everything above into account – here is how we think about it:
Going with Apple or Google makes a lot of sense if you want to minimize friction for your customers and keep your conversion rates high. Their one-click payment functionality is simple and well-understood, and you can benefit from their large existing audience. However, you will pay a significant fee for this – so it needs to be worth it for you. Identify where your target audience is and assess which one is best for you.
For payments that are less impulsive and more considered, Stripe or PayPal can be good options. They are slightly slower than app stores, but they give you more control and better profitability on a per-app basis. You’ll need to have the existing audience already to reach scale with these options.
All in all, it depends on a variety of factors that are unique to your situation. Here at Sunflower Lab, we’ve worked with many different app developers over time and we’d love to help you make the right decision. So, don’t hesitate to get in touch – we’d love to hear from you.
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Android vs iOS Which Platform to Build Your App for?
The Android vs iOS battle rages on, even after years of both operating systems going mainstream. When it comes to personal use, it will always be individual preference based on usability, functionality, and compatibility partiality. But when it comes to pursuing a mobile app development project, there are other factors at play. Not only are you concerned with creating the best product on the best platform, but you’ve also got to be conscious about your budgeting when deciding which operating system to build for. So, should you build both an Android and iOS version of your app? If not, what are the consequences? If so, which should you build first and how much will it cost? You’re not going to like this, but the answer to all these questions is: it depends. Let’s unpack the Android vs iOS battle.
Difference Between Android and iOS
There are many difference between the Android operating system and iOS as well as the devices that support them. Because of its world-wide adoptability, Android is the largest operating system in the world. It runs on devices by Samsung, LG, Google, Huawei, Nokia, and more technology hardware companies. It is mainly written in Java, C, and C++. On the other hand, iOS is designed exclusively for Apple devices like iPhone, iPad, and MacBook. It is the world’s second most used mobile operating system after Android. It was developed mostly using Swift.
Android vs iOS: Which is better?
Objectively, there is no better platform when it comes to Android vs iOS. Each present their own unique set of benefits compared to the other. On the other hand, they each have their downfalls. Let’s compare pros and cons of both Android and iOS.
Android Pros
- Dominant in global market
- More flexibility to customize app
- Diverse phone options
- Can side-load apps from outside the Play Store
Android Cons
- Takes longer to develop
- Users are slower to adopt new operating systems
- Users are less likely to purchase apps
- More susceptible to malware
iOS Pros
- Faster, easier, cheaper to develop
- Apple users more likely to purchase apps
- Tight security
- Apple users more likely to update OS
iOS Cons
- Less popular outside western Europe and North America
- Less flexibility to customize
- Apps take longer to be approved in App Store
- Fewer device options for users
Which Platform to Build Your App on
Now that we’ve compared and contrasted Android vs iOS, it’s time to start unpacking which platform is best suited for your app. This process involves thinking critically about four main concepts: budget, timeline, target audience, monetization strategy. All four of these factors will play a major role in deciding to build for Android or iOS.
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Android vs iOS: Budget
Unfortunately, mobile app development companies aren’t going to build you an Android and iOS version of your app for one low price. Rather, there is a price associated with both and Android version of your app and iOS. This is because the app code has to be written twice—once for iOS and once for Android. Of the two, iOS is often the cheaper option for two main reasons:
1. Apple apps are written in Swift which requires less code than Android programming languages
2. iOS has fewer devices (remember the list from above?), components, and software fragmentations to account for compared to Android
The gap between Android cost and iOS cost continues to grow beyond deployment as support and maintenance plans are more rigorous and time-consuming for Android apps. What’s more, Android developers also have to be concerned with fixes bugs for users running older operating systems since Android users are less likely to update their phones—a problem Apple users don’t have to worry much about.
Android vs iOS: Timeline
In addition to generally being more affordable, iOS app development is faster than Android app development—some estimates put development time at 30–40% longer for Android. Like mentioned above, less code, fewer device screens to make compatible, and less work after deployment are what save software engineers time during iOS development compared to Android.
Android vs iOS: Target Audience
Keeping the user at the center of your app experience is the most important thing during your app development journey. And so, it is imperative to look at your target audience and consider their geographic and demographic characteristics. If you’re targeting a global audience, Android may be your best bet. But, if your audience is in Western Europe or North America, Apple may be a better choice.
iOS Demographic Fast Facts
-iOS Apple users are more likely to have more education and hold managerial positions
-iOS users tend to be younger, with a greater share of the 18–24-year-old market
–Women are more likely to use iPhones than Android
Android Demographic Fast Facts
-Android is dominant in global up-and-coming markets, including in Asia, Africa, and Latin America
-Android users are more likely to work in technical jobs
-Slightly more men prefer Android than iOS
Source: App Annie
Monetization Strategy
Developing a monetization strategy for your app development project should be one of the first items on your to-do list. Some people opt for the investor route, others prefer a subscription program for a solid ROI. Charging users per download is another option you may consider. If you select this monetization strategy, building an iOS app will likely bring you more success over Android. Here’s why:
-iPad & iPhone users earn 40% more than the average Android user
-Apple users tend to spend more on apps
-Android users tend to be less willing to pay for apps than iOS users
Building your Android and/or iOS app
Deciding between building an Android app or an iOS app is not easy. You must consider your budget, timeline, target audience, and monetization strategy before making your decision. Ultimately, there will be tradeoffs if you decide to build either an Android or iOS app. In order to reap the benefits of both operating system, many folks opt to build them both. This is a sure-fire way to make your app available to all users!
Sunflower Lab is an iOS app development company and Android app development company with over 10 years experience. We were early adopters of both operating systems because we knew it would have a great impact on the way we live, work, and play. Our customers come from all shapes, sizes, and backgrounds to discover the power of mobile app development. To start your journey, contact our mobile app specialists today.
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