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Best way to compensate third party developers for their apps?

In the context of an app store that my customers will purchase from. The apps will carry a monthly subscription determined by us and the developer. Is appreciate thoughts on compensation, IP etc.

Thoughts?

9 Replies

Alan Peters
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Alan Peters Entrepreneur
VP Product and Technology at BusinessBlocks
An ad network would be from 60/40 to 80/20. iTunes is 70/30 on all transactions.
Cheng-Chien Kuo
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Cheng-Chien Kuo Entrepreneur
Co-Founder / VP of Engineering at RetSKU
The best case will be having the company own the IP and compensating developers and yourself through the company.

The upside of going through a formal corporation structure is that it's contractual and the IP is much easier to transfer/sell later on.

For revenue split, it's your and that developers' negotiation.


Kate Hiscox
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Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
Hi Cheng - when you say have the company own the IP - you mean our company or the developer?
Cheng-Chien Kuo
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Cheng-Chien Kuo Entrepreneur
Co-Founder / VP of Engineering at RetSKU
your company
Aji Abraham
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Aji Abraham Advisor
Technology Expert for Startups
If I am selling an app through your marketplace to your customers, I would expect something like 70% + for the developer. If your model is flexible you can of course try to buy the full rights of the app, with a single payment to the developer.
Kate Hiscox
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Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
Thank you Aji -
Israel Y. (Izzy) Cohen
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Israel Y. (Izzy) Cohen Entrepreneur
Director of Product at Wiser (formerly WisePricer)
In e-commerce its different, especially for subscription services (that's how app marketplaces on companies like BigCommerce work).

You will have to create some kind of an affiliate model for the life of the client, or some kind of a CPA deal which can be even higher than 100% since they are getting the subscription and recurring revenue.


Kate Hiscox
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Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
Right - so in your opinion @Israel, 70% of the recurring subscription (paid to the developer) is reasonable? They would be maintaining and supporting their app.
Israel Y. (Izzy) Cohen
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Israel Y. (Izzy) Cohen Entrepreneur
Director of Product at Wiser (formerly WisePricer)
You cannot take 70% for the life of the client. More like 15-30%, and it will be very hard to track.
For example, what if they upsell to the client on an Enterprise package, why would they let you know? You need to have a very good relationship with the developers to go that route. And you will need to take only a reasonable cut (15-30 top).

The easiest way is to have them pay you one time fee per conversion. That fee can be worth 3 months worth of subscription or something along those lines, here you don't have to deal with tracking all of these subscriptions and more..
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