Forgot your password?
typodupeerror
Businesses Software

Amazon, Not Developers, Will Set New App Store's Prices 294

Posted by timothy
from the hope-that-wasn't-your-business-plan dept.
Trebortech writes "Looks like Amazon is changing the rules of the game for developers with their new Android App store. I'm curious how Amazon will determine the value of your app and if having control of your prices really matters." The core of the linked article: "Here's how it works: When developers submit apps to Amazon's app store, they will be able to set a suggested retail price ('MSRP'). It can be free, it can be $50, whatever. Then Amazon -- not the developer -- will set the retail price. It can be full price, it can be a sale price, or it can be free. Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater."
This discussion has been archived. No new comments can be posted.

Amazon, Not Developers, Will Set New App Store's Prices

Comments Filter:
  • While it might seem unfair. It's not like it's the only app store out there. They can always submit to the one maintained by google. Unless there is something that prohibit them from doing so.
    • by QuantumG (50515) *

      unfair? Sounds like a typical retail store to me. "our RRP is $19.95" "That's nice, we're gunna sell it for $21.99 for three weeks and then slash the price to $17.95 and you take back all the stock we don't sell, ok?" "uhhh.. ummm.. no.." "no sale, later rep."

      • by houghi (78078)

        OK, no sale. Will be a bitch when all customers buy at your competitor.

        OK, that will only work if you are big enough. So in the end, size does matter. The big ones keep getting bigger, giving them even more power to 'negotiate'.

    • by Seumas (6865)

      It doesn't seem unfair to me, at all.

      Manufactures often set MSRP on items. Stores still sell them at whatever price the stores wish. If they want to give a sale on the item at 30% below MSRP, they do it. If they need to clear the shelves and practically give it away, they do. Why should this be any different? Since when does the manufacturer of a product get to determine the price the retailer sells it for?

      Of course, on the other hand, there are a couple valid points:

      1) Since when does the amount that the r

      • Manufacturers of physical goods set a wholesale price and a recommended list price, or suggested list price. Some manufacturers use contracts to set a minimum advertised price (not that uncommon, you can sell for less, but can't advertise below the MAP outside the store), a few manufacturers don't allow any discounts at all.

        It sounds like Amazon is taking the WalMart model even farther and setting the price they want to pay the developer too.

      • If you do something for me that is equivalent of 400 $ and I pay you 1000$ that's unfair, if I pay you 100$ it's unfair. The point is, as much as we dislike our corporate overlords, fairness should be in order. So what I am trying to say, that system is not fair, as in the end you don't earn what you should be earning. Whether you got paid more or less.
      • Re:Ah... (Score:5, Insightful)

        by Pharmboy (216950) on Saturday January 15, 2011 @10:29AM (#34889076) Journal

        You can't really compare that way. The cost to stock your software at Amazon is close to zero. They are not buying a fixed number of units from you. Technically, they aren't even buying and reselling the software, they are simply brokering the sale for you, since they never invest any money into the transaction. That said, the 30% commission is very reasonable, but not sure everyone will like Amazon setting prices. Even if Amazon does a good job with it, the fact that they are setting the price for a product that they are actually only brokering is problematic.

      • by Golddess (1361003)
        The problem though is you're trying to compare physical goods with digital goods, which do not have the same limitations. Amazon doesn't need warehouse space for 10,000 of the same app, they only need HDD space for a single instance of that app.

        I suppose one could still straight-up buy a license to sell 10,000 copies of the app, but why would you? It doesn't appear to make business sense to "stock up", because there is no stock of which to speak.
      • by h4rr4r (612664)

        1. happens all the time with the big retailers.
        2. happens all the time with the big retailers.

      • by hedwards (940851)
        The problem is that Apple and Google let developers set the prices and then take a cut of the proceeds. If the price is too high few apps are sold and if the price is low then they get a smaller cut on a larger number of downloads. What Amazon is doing is basically screwing developers over.

        The developer will suggest a price and then if Amazon chooses to go with it they get only 20% of the proceeds allowing Amazon to keep 80% of the money. Whereas if Amazon chooses a different price then the developer get
        • The developer will suggest a price and then if Amazon chooses to go with it they get only 20% of the proceeds allowing Amazon to keep 80% of the money. Whereas if Amazon chooses a different price then the developer gets to keep 70% and Amazon keeps 30%.

          Good grief. That's not what's happening. From the fine summary (emphasis added for the reading-impaired):

          Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater .

          So if you set the MSRP for your app at $100, then unless Amazon rejects it entirely, they will pay you at least $20 for every sale.

          If they end up selling it for that $100, then they will pay you $70 for every sale.

          Dan Aris

    • Amazon sees themselves (rightly) as a retailer in creating this venue...that is *not* a provider of a marketplace. This is a very traditional and standard approach in how a retailer interacts with vendors. It has relatively good tax implications for vendors (simplifying their issues) and is efficient for the market. It does, however, present the interesting issue of creating two potentially radically different prices where apps are available in both Amazon's retail shop and other's vendor spaces. N.B. This,

  • I have to take the amount of money I plan to make, multiply by 5 and then announce it to Amazon? To which Amazon then either follows my lead (and make my app prohibitively expensive so nobody buys it) or decide it's too much, cut the price by like 50% and ... pay me more in the end?

  • Pricing tactics (Score:5, Insightful)

    by Froggie (1154) on Saturday January 15, 2011 @09:20AM (#34888760)

    I am a developer, I want $2 per sale, so I set the price at $10 knowing it will never sell at that price.

    Amazon will then have it almost permanently on sale at $2.85, "70% off!" - which is coincidentally the 70% return mark.

    The basic premise seems to me to be that Amazon will be able to offer huge discounts on apps because the developer nominally 'agrees' that their recommended sale price is offensively high - because the pricing strategy compels them to. But the developer gets decent money, so neither party loses. The only loser is the consumer who are being deceived into thinking they're getting a huge discount.

    It'll be interesting to see how this plays in different countries - for instance the UK has no great respect for recommended prices and insists that items on sale are actually sold at full price for some (small, admittedly) proportion of the time. I imagine the rules vary by country, too.

    • Re:Pricing tactics (Score:5, Interesting)

      by ShakaUVM (157947) on Saturday January 15, 2011 @09:29AM (#34888798) Homepage Journal

      >>It'll be interesting to see how this plays in different countries - for instance the UK has no great respect for recommended prices and insists that items on sale are actually sold at full price for some (small, admittedly) proportion of the time. I imagine the rules vary by country,

      By contrast, here in California, we apparently get to pay full sales tax on the imaginary MSRP dreamed up by some marketing guy smoking crack. Even if you get it for free, or with a discount, or whatever. I was mildly interested in taking up Verizon on a 2-for-1 Blackberry sale, before they told me I'd have to pay $70 in tax for the "free" phone, since the MSRP on a free phone was apparently around 700 dollars. I don't know if that's just cell phones or what, but it's just ridiculous.

      >>Amazon will then have it almost permanently on sale at $2.85, "70% off!" - which is coincidentally the 70% return mark.

      Which, all things considered, isn't too bad a situation. Customers get cheap-ish apps, developers get 70% of the sale, and Amazon gets lots of people buying because they're constantly on "sale".

      • by mspohr (589790)
        This is only for cell phones. Since your "free" phone is not really free but is subsidized by your 2 year contract. I'm still amazed at how many people fall for the "free phone" scam.

        You are paying for your "free" phone over the course of your service contract. The reason you have sales tax is that the service contract does not have state sales tax (since it's a "service") so California wants to make sure you pay tax on the phone (merchandise). California has figured out the scam... why can't you?

    • That's basically what they do with books. When you buy a book wholesale, it comes with an price stamped on it, which is double the wholesale price (what the retailer pays). Amazon then offers 25% off!111eleventyone, which means wholesale price + 50%.
      • by Peeteriz (821290)

        If retailers can advertise '50% discount' while offering the normal, expected price, then it's a symptom that your truth in advertising laws aren't working for the consumers.

        • by h4rr4r (612664)

          A far simpler law would just be that the seller must disclose the price he paid for any good.

    • The basic premise seems to me to be that Amazon will be able to offer huge discounts on apps because the developer nominally 'agrees' that their recommended sale price is offensively high - because the pricing strategy compels them to. But the developer gets decent money, so neither party loses. The only loser is the consumer who are being deceived into thinking they're getting a huge discount.

      But what happens if stores have a requirement that your app price in their store is never lower than the price of the same app in a competing store?

      • by Cryacin (657549)
        Then you'll wind up like cheap jewellery stores in Australia. Where EVERYTHING is on permanent 50% discount!!!
      • by stg (43177)

        Then you can't sign with them and Amazon at the same time.

          I was once "invited" to sell my software on a site that had this rule in their contract. I simply declined to do business with them.

    • by Suki I (1546431)

      I am a developer, I want $2 per sale, so I set the price at $10 knowing it will never sell at that price.

      Amazon will then have it almost permanently on sale at $2.85, "70% off!" - which is coincidentally the 70% return mark.

      The basic premise seems to me to be that Amazon will be able to offer huge discounts on apps because the developer nominally 'agrees' that their recommended sale price is offensively high - because the pricing strategy compels them to. But the developer gets decent money, so neither party loses. The only loser is the consumer who are being deceived into thinking they're getting a huge discount.

      It'll be interesting to see how this plays in different countries - for instance the UK has no great respect for recommended prices and insists that items on sale are actually sold at full price for some (small, admittedly) proportion of the time. I imagine the rules vary by country, too.

      That might be why they have separate and distinct USA and UK stores.

    • by houghi (78078)

      In Belgium you can have sales only during two limited periods during the year. Many stores are against it and not because they want to be nice to their customers. :-/

      As you said, the 'only' loser is the customer.

    • by surzirra (1977164)
      It will definitely be interesting to see how consumers end up viewing huge discounts on these apps. I am sure there is some term in Economics for a person's willingness to factor a discount into the opportunity cost of not buying the product while it's on (a seemingly temporary) sale.
    • by Alef (605149)

      The only loser is the consumer who are being deceived into thinking they're getting a huge discount.

      For a while, I would say. Either Amazon would have to offer some apps with a smaller discount, or users will figure out that everything is always at 70% discount, and that the discount figure is actually BS.

      But I agree with your general analysis -- the "recommended price" is a pointless number. What the developer is actually setting is effectively a lower limit of the price.

      I suppose it's possible that Amazon will be using more complicated pricing schemes towards customers as well; "Buy two apps and get thi

    • Re:Pricing tactics (Score:4, Interesting)

      by fermion (181285) on Saturday January 15, 2011 @10:27AM (#34889064) Homepage Journal
      I think it goes a bit beyond this. Amazon is a sales site, so makes money from directly selling product. It is not like Apple and Google where the money can be made off some products, and other products just need to cover costs. Sure Amazon can have loss leaders, but there is not reason to make an entire catagory a loss leader, especially if there is not expectation of profit on the back end.

      So what Amazon is doing, IMHO, is to make sure they never sell at a loss. I don't suppose this is any different from what they do with any other product. There is the cost of the product from the manufacturer, the costs associated with the sale, the profit, which leads to the final price. The final price, as we all knows, varies and is set by Amazon. So a developer wants a dollar, so sets the MSRP at five. As long as Amazon sells it for more than a $1.42 the developers get more, so it is win win. If I were an Android eveloper, I would prefer this model where sales are actively managed rather than a site where Apps were just plunked down.

      I think this is a reasonable mode for a private App store that is not subsidized by the hardware the Apps. Developers are guaranteed a certain amount per sale, and Amazon is free to adjust the price to meet market conditions. Amazon is not cheating developers out of profits from the sale. It does allow them to sell free Apps, but, as mentioned, Amazon is not doing this to promote other products, so it makes little sense to offer free apps the way they offer free books for the Kindle.

    • by Graff (532189)

      The basic premise seems to me to be that Amazon will be able to offer huge discounts on apps because the developer nominally 'agrees' that their recommended sale price is offensively high - because the pricing strategy compels them to.

      It's all pretty ridiculous. Let the developer set the price to whatever they want. If it sells, cool, if not then someone else will come around with a similar product at a better price. Then the new product will sell.

      Eventually each developer will either figure out how to best price his products or he will fail miserably. There's plenty of developers aching to take his place. Welcome to the free market!

  • so now every developer just sets their recommended price to 350% the price they would otherwise .
    if amazon reduce it then you still get the same as their 70%.
    if amazon don't reduce it then they've decided a higher price will mean higher revenue and the devs get more.

    easy

    • by Fnord666 (889225)

      if amazon don't reduce it then they've decided a higher price will mean higher revenue and the devs get more.

      Or it hits the market at 350% of what you think it will reasonably sell for and you end up making 5% of the sales you had expected.

  • by mdsolar (1045926) on Saturday January 15, 2011 @09:31AM (#34888810) Homepage Journal
    Shouldn't developers get to charge a restocking fee if Amazon fails to sell some of their product because it set the price too high? It costs something to process returns after all.
  • by Spazmania (174582) on Saturday January 15, 2011 @09:37AM (#34888832) Homepage

    What's the problem? Set the MSRP at 5 times the minimum you expect to be paid for each sale and let Amazon decide whether or not you get more. They have some experience at this; they're probably a lot better than you are at finding the optimal price point that earns them (and you) the most money.

    • by garcia (6573)

      The problem is when the price is set to $10 and Amazon decides to set the price to free.

      • by m94mni (541438)

        Well, the rules say that you get at least $2 in this case (the max of 20% ($2)of your price ($10) and 70% of the actual selling price ($0)).

      • by Spazmania (174582)

        Then you get $2 per download courtesy of Amazon and they get a "loss leader" that pulls people into the store. That's the rule: the *greater* of 70% of the sale price or 20% of the requested price. So if they sell it for half the requested price, you actually get 35% of your requested price but if they sell it for 10% you get the 20% floor.

        Again, what's the problem? You still control the price floor at least as far as what you get paid. When the manufacturer tries to tell a vendor what he can or can't sell

    • by Rockoon (1252108)

      They have some experience at this; they're probably a lot better than you are at finding the optimal price point that earns them (and you) the most money.

      If both you and Amazon are each getting a flat percentage of the sale, then the optimal price point is the same for both of you.

      However, if it is not always a flat percentage, then the optimal price point may be different for both of you. Amazon is in control of the matter so it will only be looking to optimally price for itself.

      • by dk90406 (797452)
        If I want the price to be free for my über game, and Amazon decides it is worth $5? They get $4 per sale and i get $1 (that I didn't ask for). Even better: I say my app is worth $2 and Amazon agrees. They keep 80%.
        I don't like that manipulation room. Make the developers cut 70% regardless of how the price was set.

        But at least Android developers have the option to publish their work on multiple stores. (or even their own sites)

        • by Spazmania (174582)

          Why should Amazon sport your app for free? Not the app they want to offer for free, but the cheezy app you want to push on them for free? Costs a lot of money to run those servers. It's android; if you want to make the app available for free, do it on your own dime.

  • by XDirtypunkX (1290358) on Saturday January 15, 2011 @09:43AM (#34888864)

    If you think about it, the 20% of MSRP thing is good for developers; Amazon is going to maximize their return, at the same time they're maximizing the developer's return, which is *at least* 70% of whatever Amazon is getting. If Amazon lowers or raises the price, it's because they expect a greater return (which means you'll get a greater return) and to be fair, they're probably better at setting a price to make the maximum amount of money than your average Indie developer. This means the 20% MSRP just means you'll get a larger cut than 70% if Amazon thinks they can make a killing slashing the price.

    The only way you're going to get screwed is that if Amazon decides having your application priced in an uncompetitive way is going to maximize their return on another app. This is more of a danger than anything, because they might raise the prices of all competing apps to make one in particular seem like a "bargain" at the same time they advertise the hell out of it.

    • The only way you're going to get screwed is that if Amazon decides having your application priced in an uncompetitive way is going to maximize their return on another app. This is more of a danger than anything, because they might raise the prices of all competing apps to make one in particular seem like a "bargain" at the same time they advertise the hell out of it.

      And that is exactly what can happen. Say you figured out that an end user sale price of $9.99 is optimal. You sell on the App Store, you get $7 per copy sold, Apple gets $3. Now lets say your contract with Apple was slightly different, they pay you $7 per copy but can charge less than $10. They might use your product as a loss leader and sell it for $5, but that would be actually good for you, because there will be more sales, and you still get $7 per sale. Apple can sell it for $2, even better for you beca

  • Interesting idea (Score:5, Interesting)

    by SirJorgelOfBorgel (897488) on Saturday January 15, 2011 @09:52AM (#34888894)

    It's interesting and could somewhat work, with Amazon's experience in finding the perfect price point.

    However, developers have some experience here too, and regularly adjust prices in the search for the perfect price point themselves.

    All in all, I don't really get why we, the developers, should submit our apps to yet another app store. Aren't these things meant to make everything easier for everyone ? The consumer has yet another app store to visit, the developer another one to maintain. How will people even get the Amazon app store ? Why would people install it, seeing their phones already come with Google Market, which is of course a bigger store than Amazon's ? Even if Amazons store is pre-installed, would it actually be used ?

    Take for example the Samsung app store for Android. It's pre-installed on all Samsung Android devices. There's only a handful of apps in it, and sales through this store are abysmal - so bad it's not worth the effort to have your apps available in there. And we sell quite some apps across various platforms!

    Not to mention it's one more app store to track sales through, which is actually a lot of work for some of us. If you sell a lot of copies, you need to have your taxes in order, so you need to get the right reports from the app store. This will differ per country, but in our country (inside the EU), we need to charge 19% VAT for all sales made to European customers, and then hand this money over to the taxman. That sounds pretty straightforward, and it is, as long as you have the information about how much is sold (and for how much) inside and outside the EU. You can imagine this can be quite some work ( = money) for some of these app stores as their reporting is generally terrible (Google has the reports you want only if you are from the US or UK, or make less than 500 sales a day). The app store needs enough users and sales to warrant even bothering with the extra work, or it's a net loss to publish apps there. I don't see Amazon getting there any time soon.

    • ke for example the Samsung app store for Android. It's pre-installed on all Samsung Android devices. There's only a handful of apps in it, and sales through this store are abysmal - so bad it's not worth the effort to have your apps available in there. And we sell quite some apps across various platforms!

      Clearly this is a prelude to an Amazon Android phone.

  • I am wondering if this could be a response to e-book publishers. On Amazon's Kindle store, the publisher sets the price which results in e-books costing more than their physical counterparts in many cases. It didn't use to be that way until Apple came in and negotiated new terms with the publishers allowing the publishers to sell direct to the consumer, just using Apple as a middleman and Amazon had to follow suit. This was called the Agency Model.

    I suspect Amazon's profits went down once they lost contro
  • by gnasher719 (869701) on Saturday January 15, 2011 @10:23AM (#34889024)
    This kind of agreement allows Amazon to undercut any competitor. If you have a contract with one seller that the suggested price is $10, and you get $7 for each copy sold, and you have a contract with Amazon, where the suggested price is $10, but they can sell it for less and pay you less, then Amazon can drop the price to $7 and they still make $2.10 on each sale, while their competitor will make nothing at that price.

    And I am missing the comments that came up on the Apple Store, that 30% of the retail price is robbing developers.
    • And I am missing the comments that came up on the Apple Store, that 30% of the retail price is robbing developers.

      Apple barely makes anything for those 99 cent apps though. They only get 30 cents and they're probably paying credit card fees of 3% plus 25 cents per transaction. That's 28 cents getting eaten up by credit card fees, leaving them a 2 cent profit. No doubt Apple has a better discount rate and lower transaction fees, but that's still not a lot of money. They only start making money when the price climbs above the $1 mark.

      Even if your app is $50, the 30% is completely worth it for the exposure you get fro

  • by hdon (1104251) on Saturday January 15, 2011 @10:31AM (#34889086)

    Business Insider and author of TFA, Dan Frommer, got several details wrong.

    TLDR; Amazon prevents you from selling for cheaper on other outlets, or giving away free downloads or FOSS if you want to charge on the Amazon Appstore.

    (Snipped down.) When developers will be able to set a suggested retail price ('MSRP'). Then Amazon will set the retail price. Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater.

    What does "MSRP" mean?

    In the retail business (that's where the "R" in "MSRP" comes from) retailers make speculations on how many units they can sell at what prices over what period of time, compare to actual or theoretical negotiated bulk prices for purchasing from a manufacturer or wholesaler, and then decide whether or not it meets their profit expectations. It can be a little more complex than this, but this is the gist of it.

    Well, the article linked to by Slashdot does not help you find Amazon's justification for using the terms "MSRP" or "SRP." My research, which may be incomplete, indicates that Amazon is not using this term, and rightly so. Here is an excerpt from Amazon's Appstore Distribution Agreement, which you can see in PDF form here [ssl-images-amazon.com] (MD5 checksum 15636c42ecfb47dc819445ad3214eac4, just in case they change the file in the future without renaming it.)

    Section 2a of Amazon's Appstore Distribution Agreement

    For each sale of an App, we will pay you a royalty (“Royalty”) equal to the greater of (i) 70% of the purchase price or (ii) 20% of the List Price.

    Ok, so what we're actually dealing with is called a "List Price" in the legal agreement to supply Amazon's new App Store. This is a more correct term, because an MSRP is legally unrelated to the price a retailer secures from their supplier for units of the product. It's clear though that this "List Price" bears legal weight in determining the PPU (price per unit) of the product from the supplier (or, developer, I guess.)

    So at this point what we have established is that the "List Price" in fact has no bearing on what the app will be sold for, but is defined to be five times the minimum PPU the developer is paid.

    Here is a really important detail that Business Insider and author of TFA, Dan Frommer, glossed over:

    ..if your app is $10 in the official Android market and $10 in Apple's iPhone app store, but $5 at Amazon's store, it could hurt sales in your other channels where you get more revenue per sale.

    Somehow, even managing to discuss the situation in which you set your prices differently for different sales outlets, Business Insider and Dan Frommer miss this juicy tidbit:

    Section 5i of Amazon's Appstore Distribution Agreement

    The “List Price” for an App is an amount that does not exceed, at any time, the lowest list price or suggested retail price for such App (including any similar edition, version or release) available on any Similar Service or the lowest actual price at which you make such App available for sale through any Similar Service. You will update the List Price for each App as necessary to ensure that it meets the requirements of this section 5i.

    "List Price," then, is not simply five times the minimum PPU you wish to be paid (which would effectively allow you to actually set the price you want to sell at, which would be nice) but is in fact a function of what price you are offering, but a function of the price your app is available for at different outlets! This means if your app is on multiple outlets, Amazon takes away your ability to set your price through the List Price, and even

    • by Alef (605149)

      "The 'List Price' for an App is an amount that does not exceed, at any time, the lowest price for an App available on any online distribution service that makes Apps available for download."

      Given that a future version of Kindle will probably only come with the Amazon Appstore [...]

      If you're right, this seems more like a scheme to boost Kindle sales rather than optimizing app sales. Essentially, Amazon will be able to guarantee Kindle customers that they will be able to buy apps cheaper than on any other platform, and by that get a competitive advantage over other tablet manufacturers.

      Of course, all of this hinges on enough developers going along with it.

    • Thanks for the analysis, hdon. I will definitely not be selling my Android applications through Amazon. I, and only I, will determine the price for my applications.

  • Amazon sets the price for vanity (oops "self published") books by the page. At least if you self publish and have an ISBN you can set your own price. What recourse to app developers have? Perhaps the answer is for devs to steer clear altogether, or perhaps set up a cooperative where they have more clout to negotiate their own terms.
  • Considering that you still take a fixed cut of whatever the price Amazon sells it for, what is the big deal? Amazon's interest in maximizing revenue from that product is as big as yours.

    It all comes down to whether Amazon can take better decisions about pricing than the developer. Which truth be told, will probably be the case.

    I only see this feature being unacceptable to a certain class of boutique apps where the price is extremely high for no good reason, but where the high price is also a part of the app

  • Thanks to this cluster f%^k I wont have to listen to people whine about the Apple Store for a while. Seriously if Apple said we're gonna give you 70% of whatever we decide is good or 20% of what ever you decide what do you think would happen.

    Amazon is saying they can discount your app up to 70% any time they like an you have to give up the same amount from your cut.

    Your selling an app for $10 and selling 100 a week earning a decent $1000 a week income for your hard work.
    Amazon decides dump YOUR app on the m

  • this allows Amazon to undercut any competitors price by 80 %
    $10 app on Amazon and competing store.
    on sale for $5 at competitor (50% off) - $3.50 to dev
    Amazon can sell for $1 and still break even.

    I cant see any serious developer giving Amazon control of its cash flow

  • by Symbha (679466)

    Do developers think a pay portal is worth 30%?

  • I hereby declare that the MSRP of my app is $1,000,000 per download. Amazon thinks it should be $1.99. Since $200,000 > $1.39, they pay me $200,000 per.
  • or your corner used game show, or your corner wall*mart. They're a store. They set prices. Don't like the prices they set? Market your wares elsewhere.

  • Lots of comments here that're completely missing the point. This is to prevent you from selling at multiple stores at once. You see, in addition to setting whatever price they want, Amazon also has a rule which says that you're not allowed to set a "list price" that's higher than what you sell it for on other app stores. This means that if you put the same app in both Google Market and Amazon's store, then Amazon's store will always be cheaper - and you can't raise the price to counteract Amazon's discounting without ruining your sales on Google Market.

    This is just one of several showstopping issues that ensure that I, as an app developer, will not put anything to Amazon's app store.

  • by Fareq (688769) on Saturday January 15, 2011 @02:15PM (#34890572)

    Fine. I take my $3 app (my cut: $2), and list it as "MSRP: $9.95". Amazon sells it for $3. I get $2.

    All this does is encourage unreasonably high MSRP values. Maybe that's what amazon wants... that way they can list everything at 60-70% "discount" off of a fictional MSRP all the time.

  • by Garwulf (708651) on Saturday January 15, 2011 @02:51PM (#34890928) Homepage

    As another comment on here pointed out, just about everybody is missing the point of what Amazon is doing. This isn't something to benefit the customer - this is a monopoly move designed to wipe out any competition to Amazon in the app marketplace.

    I'm going to discuss this in layman's terms. Now, for details on the contract, see this post, which shows you where things are on the contact and how they're working: http://developers.slashdot.org/comments.pl?sid=1951734&cid=34889086 [slashdot.org]

    This is an evil monopoly move by Amazon, and it isn't the first one. This is the third I've seen. The first was a move to wipe out print-on-demand printers used by the small press market - Amazon contacted several of the larger small press publishers and informed them that if they didn't switch to Amazon's in-house printer (a company called Booksurge known for shoddy printing jobs), Amazon would remove the buy button on their books. Amazon did pull that trigger, by the way, and it resulted in a class action lawsuit that put an end to that particular trick. The second was an attempt to wipe out any competition selling e-books - Amazon spun the dispute as greedy publishers wanting to price-gouge customers, but what it was actually about was that Amazon had tried to get publishers to sign contracts stating that Amazon would always get the lowest list price for e-books, regardless of any other arrangements past or future...including direct sales from the publisher's own website. The publishers fought that one and won, even though they took a PR hit for it.

    This one is an effort to wipe out any competition in the app market by manipulating app developers. Here's how it works:

    As the article said, the terms are set where the app developer will receive 70% of the actual sale or 20% of the list price (basically, the price the store is supposed to sell it for), whichever is greater. As was left out (and pointed out in the post I linked to), there's a clause in the contract stating that Amazon must always get the lowest list price.

    So, if you're a developer, you need to calculate the list price of your product based on what you need to receive from each app sold. Let's say that's $4. But, with the terms of this agreement, you are only guaranteed that if it is 20% of your list price, so you have to set your list price at $20. Therefore, if Amazon turns around and sells it for $4.50, you are guaranteed to get your $4.

    But, this also means that in order to ensure that you get that $4, you are now forced to overprice your product. So, everybody else who carries your product - including yourself, if you have your own little app store - has to do it at a list price of $20. In the meantime, Amazon can set the price to whatever it wants, and so long as it doesn't go below $4, it will make a profit on the sale. And, Amazon even makes it look like it is doing you a favour - after all, if your app sells for $10, you're going to get $7 from it. Amazon gets to have the lowest prices, and you - the developer - have made it so that every other app store gets thrown under the proverbial bus when it comes to your app, because they will never be able to compete while using the list price that you are forced to give them.

    This is an incredibly dirty trick, and what needs to happen is that app developers need to fight back and refuse those contract terms en masse. If they can do that - like the publishers did with e-books - then Amazon will be forced to back down. If they don't, then Amazon will stand a reasonable chance of not only gaining a monopoly position, but actually wiping out any competition.

"When it comes to humility, I'm the greatest." -- Bullwinkle Moose

Working...