This week the Inter-tubes have been on fire about the refund policy that Apple follows.

The policy in question is that when a customer gets a refund on an app that they do not like the developer apparently must reimburse the user 100% of the cost of the app.

Seem fishy?

You bet! Developers receive only 70% of the revenue in the first place. Logically, if a user requests a refund then Apple would be expected to also return it’s 30% cut to the user.

That is not the way it works – the developer is expected to pay 30% to users who return their apps while Apple will pocket the cash.

The nightmare scenario that worries developers is the case where a developer sells 1000 apps. They would get a $700 payout. However, if every user returned their app the developer would not only lose the sales but would have to pay $300 to Apple!

Multiply the $1,000 to $50,000 or even $100,000 and you can see why developers are nervous. Absorbing this risk could have quite a chilling effect on new developers.

Overblown Reaction?

Even though this policy is unfair and hostile to developers, is it really as bad as the nightmare scenario would suggest? I am not so sure…

I have sold thousands of apps – some have high ratings, some have low ratings and I have had unhappy customers as well as raving fans. Even though I have sold many apps I have only had SIX refunds.

So, I am watching this closely and so should you. But, I am not panicking. This is a cost of doing business with Apple and you will have to make a decision about whether you want to pursue it based on what Apple brings to the table.

In case you have forgotten, what Apple brings to the table is 20 million raving fans waiting to buy your apps.

Read More!

Here are two more viewpoints on this topic:

Don’t Panic: Nothing’s changed in the developer contracts.

Apple’s iPhone App Refund Policies Could Bankrupt Developers

What do YOU think? Does this development change your iPhone development plans?