◀ Back to NotesPublished on December 24, 2023

Costs of running a macOS app studio business

I created The low-tech guys, a brand under which I develop macOS apps for a living.

I started this business with a good friend of mine, thinking I could help him stop working long hours at his consulting job and ease into more creative work.

However, getting to a state where you earn enough to live off the app sales takes time, and he did not have that time. So it's just one "low-tech guy" doing all this, and that is me.

So what are the largest costs of running such a business?

Well to be honest, that is time. Time I could have spent with my wife, my brother, my dog, instead of answering support emails from my first waking moment to right before sleeping. Time I could have walked outside, do some handy work in natural light, instead of sit on my butt and wreck my spine 6-12h a day.

But time is hard to quantify, so let's talk about money instead.

# App Store

I sell 3 apps on the App Store:

rcmd makes the bulk of the sales, but mostly because I didn't have time to further develop and act on feedback for the other two.

Here are the numbers for 2023:

  • Sales (how much people paid in total): $14.9k
  • Proceeds (how much I get from the sales): $11.5k
  • Costs: $3.4k
    • App Store commission fee (small business 15%): $2.3k
    • VAT, Sales Tax, foreign currency exchange fees: $1.1k

# Paddle

I publish apps independently as well because the App Store has some strict restrictions regarding what you can do in an app (no private APIs allowed, no IOKit for talking to hardware directly etc.).

So the apps where I can use code to tickle my curiosity and experiment more are not on the App Store.

I use paddle.com for selling these apps because they handle all tax work for me (calculate VAT and sales tax, send it to the relevant authority, handle reverse charge and chargebacks etc.). They also provide a useful Mac SDK for licensing and checkout.

For most year, I only sold Lunar there, an app for adaptive monitor brightness. Just recently I also started selling Clop (an image, video and PDF optimizer), but most numbers will be relative to Lunar's price.

Here are the numbers for 2023:

  • Sales (how much people paid in total): $93.5k
  • Proceeds (how much I get from the sales): $73.3k
  • Costs: $20.2k
    • Paddle commission fee (5%): $4.7k
    • VAT, Sales Tax, foreign currency exchange fees: $15.5k

The disadvantage of using a Merchant of Record like Paddle is that I don't get to reclaim the VAT at the end of the year. That's because it's some kind of B2B relation: I sell them my app in gross with 0% VAT, and then they resell it and collect taxes themselves.

Oh well, the price of convenience and peace of mind...

# Romanian corporate income tax

So in 2023, people paid a total of $108.4k (wow.. 108400 US dollars.. I’m amazed to see that number myself, thank you good people for helping me keep doing this) and after paying fees to a bunch of states and platforms, I’m left with $84.8k.

Before taxes. Yep, it doesn’t stop here, you didn't think I'd get to spend eighty-five thousand dollars, did you?

THE LOW-TECH GUYS S.R.L. is a business incorporated in Romania so it has to pay taxes on the income. Calculating that final tax needs applying such a chaotic and stupidly complex formula that I think I’ll spare you the details.

If you really want to know, it’s something like: I have to pay myself a minimum salary of about $1k/month on which I pay half as taxes, then I pay 3% from the remaining sum as income tax, then I pay 8% as dividend tax, then I pay 10% of 24 minimum monthly salaries for mandatory health insurance, then I have to pay a mandatory accountant and a mandatory billing software, and a mandatory business bank account... I most surely forgot something and I'll also have to pay a mandatory fine next year

In short, another $13k flies out the window to Romanian corrupt politicians to line up their greasy pockets. A small amount of those might end up in healthcare and education, so that corrupt hospital managers and inspectors can get their part as well.

I'm left with $71.8k. Before expenses.

Thankfully, a macOS app business doesn't have many of those. Here's what I currently have to pay:

  • A bare metal Hetzner server: $600
    • This is where I host all my DMGs, websites, APIs, analytics, experiments etc.
  • An IPStack subscription as a fallback for Lunar's Location Mode: $140
  • Apple Developer Membership: $100

Depending on the app features, I might also need to buy the latest MacBook or iPhone to develop and test hardware-related features (like DDC support for M1 or XDR Brightness for MacBook HDR screens), or for example I needed to buy a bunch of varying light sensors and ESP32/ESP8266 boards to develop adaptive monitor brightness using wireless light sensors.

These are not recurring so I can't count them in, just thought I'd note them here for whoever's interested.

I'm also a Romanian, living in Romania, earning USD but spending RON so I'll also lose a significant amount on foreign currency exchange. I calculated that to be at least $1k

# End result

    $108 400
   -  $3 400  (App Store)
   - $20 200  (Paddle)
   - $13 000  (Romanian CIT)
   -    $600  (Hetzner server)
   -    $140  (IPStack API)
   -    $100  (Apple Developer Program)
   -  $1 000  (Foreign exchange)
     $69 960  (Net profit)

     $108 400  (What people paid) [100%]
    - $69 960  (What I get)       [64%]
      $38 440  (What God knows how many intermediaries get just so that I am allowed to ask money for my work)

In the end, I get the equivalent of a $5800/month net salary. Not bad, but very far from what I could earn as a consultant.

To put it in perspective, this summer I took a $120/hour consulting gig for a spanish MDM company because they said they need a few days worth of work for a macOS app and I said why not, it's just a few days. It turned out they needed a lot more and were happy to continue paying that amount because macOS skills are not easy to find.

But I could not fit into the same old Slack chat + Zoom meetings + report madness that consulting work needs. So I said "no, I'm sorry, I'd like to continue building my apps".

At $120/hour, one would get $120 * 8 hours * 21 days - ~12% taxes$18k before taxes. That's about $214k after taxes which is a mind boggling amount for a Romanian.But I like to believe that with that difference of $12k I'm buying time.

Time that I can spend as late mornings, drinking coffee quietly while playing with my dog. Time that I can spend eating a quiet meal with my wife without being in a hurry for a meeting, and then taking time after to talk about our house projects. Time for taking weeks off from being in front of a laptop without having to ask someone for my own time back.