Ever wonder how much your friendly neighborhood app developer makes? As you could imagine, at $1 a pop, not too much generally speaking.
As a developer who has had just over 2 million apps downloaded on mobile and desktop platforms, I can tell you that my specific rate of purchases among those downloads is 2%. That said, it’s pretty clear we’re already dealing with the fact that we basically give away the majority of our work. Couple that with free support for those free downloads and individual developers like myself give our time away for free as well. At this rate, as you might suspect, I have a day job.
The VAT
When I found out there were changes in the tax laws in the European Union that govern the VAT (Value Added Tax) applied to app purchases, I was surprised to see that every country was choosing to take a larger slice of the pie. Where, previously, the general rate was 15%, every country’s new, individual rate was more than that—up to as much as 27%. These changes were effective 01/01/2015.
Break Down
App stores, for the benefit of the consumer, generally make the app price the final price. That is, your chosen price point—let’s say, 99¢—is the total price including tax.
So let’s break this down. Someone buys my app for 99¢ in Sweden.
VAT takes 25¢ (99¢ * 25%)
The store takes 22¢ (74¢ * 30%)
I temporarily get 52¢ (99¢ - 25¢ - 22¢)
Later, my government takes approximately 13¢ (52¢ * 25%)
In the end, I make 39¢ per sale of a 99¢ app in Sweden. Wow. That’s worse than I thought when I set out to write this. In some other EU countries, it could be even less—though not too much.
I never expected to make a million dollars and it looks like I won’t have to worry about my expectations being shattered but the majority of the money my app generates goes to other people.
So?
So what? Where else can someone like me, on their own, create something and make it available for sale to huge numbers of people around the world? Why don’t I just increase my price in Sweden?
