May 10 2024
TL;DR I've discovered that starting in February, Apple mistakenly subtracts the price of the previously purchased app twice from the proceeds of a "Complete My Bundle" purchase, thereby causing me to take a loss on each such bundle purchase. This accounting change has cost me thousands of dollars over the past few months.
Update: May 15 2024
This evening I received a phone call from an Apple representative. I was told that there was indeed a software bug in the bundle pricing calculation, which was fixed yesterday. I was also told that affected developers such as myself would be compensated for our lost revenue, and I'll receive a follow-up email later.
I would characterize the Apple representative and our conversation as pleasant and friendly, and I'm glad that the problem seems to have come to a good resolution. Thanks to Daring Fireball and Apple Insider for highlighting this blog post!
The purpose of this blog post is to raise awareness about the issue, for the benefit of both myself and other developers who sell app bundles in the App Store. I'll begin with some background. In December I released StopTheMadness Pro, a major upgrade to my web browser extension StopTheMadness. Since the App Store unfortunately does not support paid upgrades, I decided to use app bundles as a workaround. In the iOS App Store there's a StopTheMadness Pro Mobile Upgrade Bundle that includes two apps, the new StopTheMadness Pro and the old StopTheMadness Mobile; in the Mac App Store there's a corresponding StopTheMadness Pro Upgrade Bundle including StopTheMadness Pro and the old StopTheMadness for Mac. The base price of each app bundle is $14.99 USD, the same as the price of StopTheMadness Pro itself. Customers who already own the old StopTheMadness can "Complete My Bundle" to purchase StopTheMadness Pro for a discount: the price they pay for the app bundle is $14.99 minus the price they already paid for StopTheMadness. For example, the current price of StopTheMadness Mobile is $9.99, so the price to Complete My Bundle and get StopTheMadness Pro would be $5.
Apple's accounting for Complete My Bundle purchases has always been a bit strange. In the App Store Connect monthly financial reports, there are two line items for each purchase, one for the bundle and one for the previously purchased app. The bundle is listed as an addition to my proceeds, while the previously purchased app is listed as a subtraction from my proceeds, effectively a refund. The amount of the refund is the price that the customer originally paid for the old StopTheMadness, which can vary from customer to customer, because the price of StopTheMadness has varied over the years. Apple's cut of the proceeds also factors into the additions and subtractions; the App Store Small Business Program cut is currently 15%, though the old 30% cut still applies to the refund amount of old StopTheMadness purchases that occurred before the Small Business Program existed.
In the December and January financial reports, everything "worked as expected". A purchase of the StopTheMadness Pro Mobile Upgrade Bundle was listed as 12.74 (85% of 14.99), and the corresponding StopTheMadness Mobile refund was listed as, for example, -8.49 (85% of a 9.99 refund). When all of the line items are combined, I made a $4.25 profit from that transaction (85% of $5).
Something strange started to happen in the February financial report, though, and this strangeness has continued into the March and April reports. (The April proceeds have not yet been paid out to developers.) There are still two line items, and the "refund" line item remains the same, showing the full price (less Apple's cut, as always) of StopTheMadness Mobile subtracted from the proceeds. But the bundle line item has changed: now, instead of 12.74, it lists the price that the customer actually paid to Complete My Bundle (less Apple's cut). So for example, if there's a -8.49 refund line item for StopTheMadness Mobile, the corresponding StopTheMadness Pro Mobile Upgrade Bundle line item is 4.25 instead of 12.74. In other words, the price of the original purchase of StopTheMadness Mobile is subtracted twice from the proceeds, once in the refund line item and once in the bundle line item. As a result, I've actually lost $4.24 on that purchase ($4.25 - $8.49). In other words, instead of Apple paying me for selling an app bundle in the App Store, I'm paying Apple! These losses are subtracted from my total proceeds for the month. If my sales consisted only of Complete My Bundle purchases, I would end up owing Apple money at the end of the month! Obviously, that's wrong, and crazy.
You might suspect that I'm confused, and Apple has simply shifted things around in the report, for example into a third StopTheMadness Pro purchase line item. But I've gone through every line item in the monthly financial reports. Every discounted bundle purchase has a corresponding refund line item, so they can be matched up, and all of the numbers in the line items add up to my total proceeds. Moreover, if a bundle purchase also now counted as a full StopTheMadness Pro purchase, then it would still be wrong, because I'd be making too much money instead of too little, i.e., $12.74 + $4.25 - $8.49 = $8.50 proceeds on a transaction where I should only receive $4.25 proceeds.
I know that I'm making too little money rather than too much money because my actual recent payments from Apple are significantly smaller than the estimated proceeds over the same period in the Trends section of App Store Connect, which is how I noticed the issue in the first place, triggering my detailed investigation. I found that the estimated unit sales in Trends were about the same as the unit sales in the financial reports, despite the large disparity in proceeds. This is what led me to scrutinize every line item in the reports, where I found what appears to be an accounting error, a double subtraction from my proceeds.
Last night, after running all of these calculations, staying up much later than I wanted, I contacted Apple Finance about the issue. I received an automated message stating that they would respond within three business days (unfortunately with the weekend coming up). I'm going public now, however, because I think other developers should know about this issue. Also, I have a decision to make: should I remove my upgrade bundles from the App Store? I continue to lose money from every Complete My Bundle transaction. Hopefully Apple will do the right thing in the end, and pay me what I should have earned, but who knows whether they will, or how long that would take. I would hate to take away the upgrade path from previous customers, but what I hate more is to run my business at a loss! I should not have to subsidize the world's most profitable corporation for the benefit of our mutual customers.
My trust in Apple is shaken. In the App Store, Apple has all the cards, handling all of the financial transactions with customers. App Store developers have no direct relationship with their customers. I've had little choice but to trust that Apple is paying me the amounts that I'm due. Yesterday I looked back at all of my proceeds since 2017 when I started doing business in the App Store, and it does appear that the amounts of Apple's payments to me have pretty closely corresponded to the estimated proceeds in App Store Connect Trends (if you can trust those numbers) up until February 2024. Only the past few months have been problematic. Still, a corporation with the financial resources and financial responsibilities of Apple should not make such a fundamental accounting error. It's inexcusable. And if "Complete My Bundle" purchases were not such a big portion of my current proceeds, I might have never discovered the error.