Our CEO’s take on Apple’s App Store payment policies, and their impact on our relationship with our customers
Friday, June 19, 2020
So far, much of the recent discussion around Apple, HEY, In App Purchase (IAP), Subscriptions, the App Store, and the iOS developer community has been about money. Is a 30% cut fair? How about 15%? What if it was 5%?
And some people say “Why not just have a special price in-app that’s 30% more than your usual price? Just pass the Apple tax on to customers?” Because that’s not the point.
I won’t deny that money, or the vig, in this case, is a large part of the story.
But personally, as the owner of a business, this isn’t just about money. Money grabs the headlines, but there’s a far more elemental story here. It’s about the absence of choice, and how Apple forcibly inserts themselves between your company and your customer.
Does the world’s largest company really get to decide how millions of other businesses can interact with their own customers? In fact, Apple’s policy distances you from your customer.
When Apple forces companies to offer In App Purchases in order to be on their platform, they also dictate the limits to which you can help your customer. This has a detrimental impact on the customer experience, and your relationship with your customer. It can flat out ruin an interaction, damage your reputation, and it can literally cost you customers. It prevents us from providing exceptional customer service when someone who uses our product needs help.
Most people don’t know what happens to your customer relationship when you’re forced to accept In App Payments or offer subscriptions in Apple’s App Store.
- When someone signs up for your product in the App Store, they aren’t technically your customer anymore - they are essentially Apple’s customer. They pay Apple, and Apple then pays you. So that customer you’ve spent years of time, treasure, and reputation earning, is handed over to Apple. And you have to pay Apple 30% for the privilege of doing so!
- You can no longer help the customer who’s buying your product with the following requests: Refunds, credit card changes, discounts, trial extensions, hardship exceptions, comps, partial payments, non-profit discounts, educational discounts, downtime credits, tax exceptions, etc. You can’t control any of this when you charge your customers through Apple’s platform. So now you’re forced to sell a product - with your name and reputation on it - to your customers, yet you are helpless and unable to help them if they need a hand with any of the above.
As anyone who runs a subscription company knows, billing issues - whether problems, or kind considerations - are delicate situations where the utmost care and attention is required. At Basecamp, it’s our #1 category of customer service requests every single month - and often by a long shot. And it’s not because our payment system is complicated - it’s very straightforward - it’s because life is complicated.
Billing concerns and account management concerns aren’t just about money, they’re about people, about situations, about context, about humanity.
For example, at Basecamp we help people for all sorts of reasons. We apply credit to accounts for all sorts of reasons. We provide hardship exceptions for all sorts of reasons. We discount our software for teachers. We provide free versions for first responders. We extend trials for those who need more time. We extend payment terms occasionally for those who can’t make ends meet this month. We make exceptions because people are exceptional. We take enormous pride in helping people out. And we’re damn good at it.
If we had to push our customers through Apple’s system, we couldn’t do any of that. Apple’s rules prevent us from servicing our customers, yet Apple gives us no choice but to submit to those onerous rules or not be represented on their platform. That’s flat out hostile - to us, to our customers, and to the community.
Further, like many sophisticated software companies, we already have a centralized billing system which is tied into our own back office systems. Administration, accounting, account management, data lookup, customer support, etc. If one of our customers is forced to pay with Apple’s payment system, we’re blind. We can’t look them up, we can’t help them. Our only answer is "Go ask Apple." What a terrible, hopeless message to send. Developers who are forced to send this message today are often met with accusations of scamming their customers, stealing their money, etc.
Our customers use Basecamp or HEY every day, we’re here for them 24/7 to help with anything. But when it comes to billing, one of the most sensitive concerns, if you’re forced to pay through Apple’s system, well, we can’t help you anymore. As a business owner who gives a shit, that’s shit.
And with multi-platform products like Basecamp, HEY, and so many others, being forced into using a separate billing system for some of your customers and not others creates significant confusion and complexity for customers.
Let’s say someone signs up for HEY on an iPhone, pays with Apple’s IAP system, and then decides to switch to an Android phone. Billing is entirely messed up now. They can’t update their credit card through the HEY app on Android because their billing info is stored with Apple. And we can’t help them. Who wins there? Apple wins. This creates immense lock-in when all your service subscriptions are tied to a single platform. If you change your phone, do you now also have to change your email address?
This is why we have a universal, non-platform-specific centralized billing system. We make a multi-platform product. Web, Mac, Windows, Linux, Android, and iOS. Pay us anywhere, we can help you anywhere. Except Apple won’t permit that - you can’t pay us our way if you’re using the iOS App. You have to pay Apple’s way, and messes everything up for everyone other than, you guessed it, Apple.
Apple’s payment policies create two classes of customers for us: "The can-helps" and "The can’t helps". Apple has no right to force this on us, on our customers, or on any business - big, small, freelance, independent, whatever.
My loyalty is to my customer, not to a platform. I wake up every day to take care of my customers, not to take care of Apple.
When you think about the big picture of a complete customer relationship, in app purchases are one of the most hostile customer experiences I’ve seen. Sure, the purchase part is relatively easy (most modern purchase flows are these days), but that’s where Apple stops. We end up with our hands tied behind our backs. Unable to help customers to our own high standards because Apple won’t let me, or my employees, do our jobs.
Now, this is true today, June 19th, 2020. Next week is WWDC. Maybe things will change, maybe they won’t. But this is how it’s been, and this is how it is. And it’s wrong.
So what do we want? I’m not saying IAP shouldn’t exist, or shouldn’t be an option. For some businesses, it might make sense. If Apple is sending you all your customers, it probably does make sense. The 30% rate is still highway robbery, as Congressman Cicilline recently said in an interview, but the fundamental problem for us is the lack of choice.
Apple, please just give your developers the choice! Let us bill our own customers through our own systems, so we can help them with extensions, refunds, discounts, or whatever else our own way. It’s our business, not your business. And Phil Schiller’s suggestion that we should raise prices on iOS customers to make up for Apple’s added margin is antitrust gold.
CEO, 37signals, the makers of HEY
UPDATE June 22, 2020: Apple reached out, and here’s what we did
Read stories from the press about this issue