Nov 16 2011

How Apple Saves Millions on Transaction Fees

I’ve joked before that Apple has more revenue sources than they do products. In addition to having great profit margins on hardware they also do well on the Apple iTunes music and app store. In addition to these, Apple brings millions with it’s developer program, with costs $99/year. Since Apple has been doing well with it’s traditional business and because Apple is so private about it’s business I feel business analysts have not had the spotlight on other aspects Apple’s finances, such as how they save millions of dollars a year on transaction fees.

Have you ever notice that when you buy a $0.99 song on the iTunes music store you may be charged two or three days later? I’ve noticed that when if I purchase a movie on a Friday and a song on a Saturday, I often don’t get charged until the following Sunday or Monday and when I do both items are charged together. How does this save Apple millions? Typically, when you have to process a customer’s credit card to charge for goods or services, the bank or merchant account that processes the credit card will charge around $0.20-0.30 per transaction and an additional percentage of the total cost after a certain amount. This is why some small business don’t accept credit cards for less than some amount, like $5-10 dollars. If you are processing credit cards for your digital goods online store, PayPal charges a transaction fee of $0.30 plus 2.9% of the total price.

I’ve positive that Apple has negotiated the transaction cost to less what a brink and mortar business would have to pay, but as an example let’s say they pay $.10 per transaction. If you buy a $0.99 song on iTunes Apple still has to pay a transaction fee for charging your card, in this case $0.10 or 10% of the total charged. If you buy two songs over a span of two days and Apple bills you for the both of the $0.99 songs together, Apple will still only pay the $0.10 transaction cost to process the credit card, or just 5% of the total price.

This is why when you purchase items from iTunes it maybe be several days before you are charged, because it is better for Apple to charge you for multiple items than to charge you for individual songs separately.

Apr 6 2010

Retweet March 2010

From time to time I just blast tweets about software development, project planning, team dynamics, or whatever else comes to mind. Here is a synopsis of recent tweets and rants. If you want to follow the conversation follow me at techknow and/or juixe and I’ll be sure to follow back.

Software Development

  • Security pet peeves: captchas, security questions, having to login after changing my password.
  • A supercomputer won’t solve the incompetence of bad programmers on a deadline.
  • All software is in beta.
  • The Like button needs to be killed.
  • \-: “premature optimization is root all of evil.” (-: “That’s what she said.”
  • This must be a record. I just improved our app’s memory consumption by 80%, some 400MB, by changing one line of code.
  • I love technology because I can now blame my misspelling on my iPhone.
  • Where 2.0 is the new meme. Is your website Where 2.0 aware?
  • Building a community and building a business around a community are not the same thing.
  • The linked list was recently patented, I’m going to patent something critical to civilization, like calculus or pottery.
  • Dear debugger, I wish you could introspect my feelings and put a breakpoint on my heart break.
  • A slew of computer bugs are caused by assumptions made by the programmer.
  • You know things are bad when you get error code 0000.
  • Bugs grow organically.
  • It is possible to make spaghetti code out of Obeject Oriented Programmmmmming?
  • Rule of thumb: use immutable objects as keys to hash maps otherwise get to you your debugger.

Team Leadership

  • The best ideas are free.
  • No matter what, you will never be less busy.
  • Let’s be honest, anywhere from 10-30% of a resume is a stretch.
  • So as not to forget anything, remember nothing.
  • When you give someone else time, you waste you own.
  • Don’t give any answer, give the right question.
  • If you have a one trick pony, ride it until it is ready to be put to pasture.
  • Problems are meant to be solved only if they can’t be ignored.
  • The one best possible thing you can do to make any situation better is to not make it worse.
  • One can lead by asking questions, just as well as giving orders.
  • If you build it, they will come. But if you make it to complex or change it to often, then they will leave.
  • The secret ingredient is to believe there is a secret ingredient.
  • I don’t express myself best when speaking, but when reflecting.
  • Praying may not change the world, but it can change your perspective which is helpful to change your world.
  • Folks usually want the what first but I think that the why and the how is more important than the what.

Product Placement

  • Facebook announced a major investment by the CIA. It was reported that the US Gov will push for Facebook Connect as a National ID program.
  • PayPal just sucks. I can transfer money to former Soviet Bloc countries faster than I can between PayPal and my bank.
  • Spam is like a staple in Hawaii. So it comes as no surprise that Mahalo is one of the most spam ridden sites online.
  • My suggestion to cable companies: give away basic cable to every American with on demand features. Add value outside the cable box.
  • Which will provide better value/info for businesses, yelp or foursquare?
  • The current Apple Appstore approval time is rand() * Months.
  • McDs should make a tofu McMuffin.
  • A sign at a Palo Alto church: redeem your soul, there is an app for that.
  • Purple Cow Thinking: don’t be boring, safe is risky, design rules now, very good is bad.


  • If there is a limit, you should, you must test it. – Seth Godin/Purple Cow
  • Vision without execution is hallucination – Thomas Edison
  • Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful. – Herman Cain