How to distribute an iOS App as a kickstarter reward?

You can charge for the app and distribute up to 100 promotion codes:

https://developer.apple.com/library/prerelease/ios/documentation/LanguagesUtilities/Conceptual/iTunesConnect_Guide/Chapters/ProvidingPromoCodes.html

You can allow 1000 users to be beta TestFlight testers

You can refund your 70% but they have to pay 30% + tax on 100% (after all, they did not pay sales tax when they made the kickstarter contribution). To do this you can have them mail you the iTunes receipt and proof of kickstarter contribution. You can send them a check or pay pal credit.

Apple hasn't weighed in on the topic AFAIK.

Spend the backer money and bulk buy your own app (the % you get back goes back into the KS project), then send the backers redeem codes. You can accomplish that with regular apps using the Volume Purchase Program. http://www.apple.com/business/vpp/

PBK

Thanks for those ideas. 1000 TestFlight testers would not be ideal but I will look into it as a backup. Then the Kickstarter reward would have to be set at a max of 1000 or less if you have real testers. The PayPal idea of getting the user to fund with kickstarter, then additionally purchasing the game on the App Store, and then refunding their money through PayPal is very messy but it would be better than not receiving any funding for the iOS game.

KMT

I looked into Volume Purchase Program (VPP). Yes, as you said it does give you Redeemable codes that can be emailed, which is great! Although the heading on the VPP page says send it to your employees I don't see any restrictions to sending it to non-employees. I hope they will accept sole traders for this program. I see that one of the requirements to join is a Dun & Bradstreet (D-U-N-S) number for your company, this seems like it might just be for corporations. I will need to research it more. Thanks KMT, this could be perfect if you don't need to be a corporation to use this and you can distribute to non-employees.

Are you already a company/LLC as part of your kickstarter effort?

Might make paying all those taxes easier...

Sorry to revive an old thread, but this seems to be the most thorough discussion of this topic I could find.

@PBK concludes that the VPP can be used to send codes to Kickstarter backers, but has anyone actually done this? Can anyone confirm this to be true?

If you look at the legal terms for the VPP, it says that:

- "You may not resell or accept any form of compensation in exchange for Volume Content".

- "The end users affiliated with your institution to which you distribute the Volume Content are collectively defined as "Authorized End Users"".

- Volume Content may only be distributed to your Authorized End Users.

The program seems to be specifically for businesses to distribute apps within their organizations and without charging for them.

(NOTE - your post doesn't seem to have made it to the actual forum - I am responding to an email)

I too would like to hear if anyone was successful with the VPP program.

The relevant VPP definitions are: "...solely for distribution to, and use by, persons employed by or affiliated with the institution, such as contractors, employees, agents" and your argument would be that the Kickstarter contributors are "affiliated with the institution" - it's a weak but it might work.

Further the restriction on compensation is "(y)ou may not resell or accept any form of compensation in exchange for Volume Content" and your argument would be that you did not get compensated 'in exchange for..' because there was no promise that you would be successful in developing the app and the compensation was accepted prior to and not contingent upon any 'exchange' - it's also a bit weak.

But consider this - it ain't fair. You're getting paid for the app and so Apple deserves its cut. I like offering to refund your 70% share to any kickstarter that sends you a receipt. And perhaps also having a lower price for the first week of sale and telling kickstarters that it's available during that one week at a reduced price (plus their 70%).

I contacted Apple again because this thread is just conjecture. VPP is just for companies and employees, Promo Codes would not work if you have over 100 backers.

>"VPP is just for companies and employees"

You wrote that is what "Apple" told you but perhaps that is just what an employee of Apple told you. Here is what is written in the Apple documents:

"...solely for distribution to, and use by, persons employed by or affiliated with the institution, such as contractors, employees, agents"

The PayPal or Stripe Way

Another way to do it could be asking backers to buy the game again at full price from the App store and then sending them the full amount back through paypal. That should not violate Apple distribution policy as the user pays for it (once through kickstarter and again through the App store). You've paid your 30% as a developer per App and the customer gets their money back for the second purchase, meaning they just paid for it once. But this would not be ideal from an accounting point of view. If the backer donated $15, you'd have to pay $1.5 for kickstarter fees. Then you would probably sell the App a bit higher (as backers normally get a lower price for believing in you before the App is made). Sell for $20. You get $14 (70%). Through your business you give $20 and $0.70 (paypal fees) back to the confirmed backers. Which means it cost you $6.70 + $1.5 = $8.20. So the $15 kickstarter donation is really worth $6.8, if it's done this way. It would be even less if you have to pay sales tax. Which some people have to do when they receive money from kickstarter (as it is perceived as income) and you might have to pay sales tax again when you receive money through the App Store, depending on your situation. EU customers have to pay over 20% sales tax.

Yes that is more accurate, an Apple employee told me that. Correct me if I'm wrong but don't they mean the same thing? You can't use them for kickstarter backers?

Case Studies

Zombie Run is a successful App that was created thanks to kickstarter funding. They distributed 3,000 Apps through the App Store for free to backers using an email gate after getting permission from Apple. But the developers say that was in 2012 and it looks like it will get you banned if you do that today.

A more recent example is République. They got funding through kickstarter and they had to reduce the price of their App (or IAP) to $0.99 instead of $5 or $10 until all of their kickstarter backers bought it. This is not ideal as what if all of the backers don't purchase it in that window. The backers have to pay an extra $1. Then all other potential buyers could purchase the App for that price, meaning you are losing $4 to $9 in sales per additional customer. They also made a République IAP free for a while too.

To PKB

I just reread what you wrote "You can refund your 70% but they have to pay 30% + tax on 100% (after all, they did not pay sales tax when they made the kickstarter contribution)."

Are you saying through Apple you can refund 70% or through your business give them back 70%. If it's the second option then that would really annoy a lot of backers, they would have to pay 30% to 37% more than people who did not back you. Probably 50% more if you lower the price for a week. They are supposed to get it for a lower price, for believing in you, not a higher price.

Do you know if you refund the customer through the App store if they can still keep using the App on their phone? I wonder if this also works for IAP.

No, they are not the same thing wherein the 'they' applies to both:

1) 'employed by' differs from 'affiliated with'. Your question is "is a kickstarter contributer 'affiliated with' the organization such that they can receive a VPP distribution"? My answer is - I don't know; and neither does some random Apple employee that you contact over the telephone.

2) an employee of an organization does not speak for the organization unless they are so empowered by the organization or unless you reasonably believe they are so empowered (this 'reasonable belief' criteria applies to certain things in certain US states and other countries).

I was suggesting you send back to the purchaser your cut of the purchase so you net $0 and they get the (after tax) discount of 70%. In fairness, Apple deserves their 30% and the tax authorities deserve the sales tax - so it is not surprising that you are having trouble avoiding it. You could do the following:

Kickstarter contribution $10.

Six months later they buy the App on the App Store for and additional $15 (aka $14.99) plus 10% tax for $16.50.

You send them a check for $16.50 so they get the App for their original $10.

You got $10 to fund your company. Now you get an additional 70% of $15 or $10.50. But you are paying out $16.50 for a net gain of $4 and a loan of $6 that is now paid back.

Personally, I'm wondering why you feel you need Kickstarter or any crowd funding source to

produce an app... Apple doesn't provide any direct way to give your supporters a copy of

the app outside of you spending money and gifting it to your supporters. That is the only

model that doesn't required the recipient to be a member of your institution or organization.

Are you hiring designers and staff to produce this app? That is a mistake and will cost you

dearly over time. Look at where Zynga is now. I wish you luck but, bringing in investors to

even begin a project isn't a recipe for success.

PBK thanks. You are right, but when you take into account kickstarter's $1 fee (10% of $10), then it's only $3 remaining. So only 30% of the kickstarter funds would be for developing the App. Not a great deal for the backers. Whereas if you develop a game for PC (Steam) or Google Play then 90% ($9) of the backers money goes into to development as those 2 platforms allow you to give copies to kickstarter backers of a paid game for free. This helps the developer and the platform make money. Hyper Light Drifter had 24,150 backers and has just been relase on Steam. In a short time it was already purchased by roughly 134,945 people. Excluding the free copies it made $2,215,900 of which Steam gets around 30%. There are lots of similar stories on Steam. So it is a good business model to have support for grassroot developers. Unfortunatly, at the moment it looks like if you are going to run a kickstarter campaign it's best to focus on Steam or Android and leave out Apple. It can still be release on Apple's App store but best not to ask people with iPhones and iPads to back you with a iOS App reward. Maybe one day Apple will have something in place to support grassroots Steve Jobs-esque entrepreneurs that have kickstarter backed Apps, like Google Play and Steam do.