UPDATED: AppStore Refund Policy Won’t Bankrupt Developers

Lonnie Lazar ()

iphone_array.jpgApple must have the sweetest distribution deal in the entire retail universe, if a report published Wednesday at TechCrunch is to be believed.

The AppStore refund policy allows purchasers a full refund up to 90 days from the date of download of any application purchased in the iTunes AppStore. Which seems questionable enough in the light of, say, the Android Market’s 24 hour return policy.

But a clause in the developer’s contract all iPhone developers must sign in order to have their apps sold in the AppStore indicates that in addition to a three month return policy, “Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the end user.”

In effect this means Apple will charge 100% of the sale price to a developer for every refund given, even though the developer only got 70% of the price of the sale in the first place.

Many iPhone app developers are on the record as having no problem with Apple’s 30% sales commission for applications sold through the iTunes AppStore. The thinking goes that independent developers gain access to many more potential customers by having their products in the widely visited venue, save tons of money on marketing and transaction costs and generally benefit from being associated with the legitimacy of the Apple brand.

When consumers get wind of this policy, which may be a new development, according to the TechCrunch report, developers of some widely purchased though basically useless apps could be in for a rude awakening.

UPDATE: No developer is likely to go bankrupt in the real world, according to a level-headed explanation posted Thursday by Erica Sadun, a developer/blogger for ArsTechnica.

DON'T MISS
AppStore Success – Has the Easy Money Been Made?

The reason, which makes perfect sense when you think about it, is that Apple never gives refunds, except in extreme circumstances and then, only after causing the customer many headaches.

All the Fart app people can rest easy now.

4 comments »

About the author

Lonnie Lazar

Lonnie Lazar is a writer-musician-web designer-attorney. He writes about Apple for Cult of Mac and Mac|Life, and about VoIP and telecommunications for Voxilla. Follow Lonnie on Twitter @LonnieLazar, join the Cult of Mac on Facebook, and find Lonnie's photos on Flickr.

(sorry, you need Javascript to see this e-mail address)| Read more posts by .

Posted in Apple, iPhone, iPod Touch, iTunes, News, Software |

  • http://www.monogodo.com monogodo

    I’d have no problem with only receiving a 70% refund for “returned” apps, if Apple is that concerned about their bottom line.

  • Max

    I am not a developer and even I think that this clause is too extreme. If Apple is allowing returns then they should sacrifice their commission. Apple does not allow returns in their stores past 2 weeks and opened software can not be returned. Secondly, I think that a 90 day return is just to long. 24 to 48 hours seems like more than enough time for a user to use an app and decide if they want to keep it or ask for a refund. Theoretically, a user could purchase an app such as a “game” and completely play it in the 90 day time frame then ask for a refund. And what about those apps that are fun for a few weeks? I guess the user is able to get a refund after they get bored with it? Does this clause cover all developers or just the game developers?

  • http://www.grinningidiot.com The Idiot

    I think this is an effective incentive for developers to not produce bad apps that are of no more value than SPAM.

  • http://www.protechnica.net RickB

    I think it’s absurd – you can’t open a software package, run it for three months, and then return it and expect a full refund.

    Frankly, many of the published metrics on app usage on the iPhone make this a scary development for companies building iPhone apps. Most apps decline significantly in use after the first few days following purchase.