How In-App Purchase Fees are Impacting Your Business

There have been polarizing changes in the industry to how app stores handle the purchase and registration for virtual (livestream) classes. Classes which have been the saving grace for small businesses through the Coronavirus pandemic... We have been committed to being transparent with our clients throughout this transition and we wanted to keep our industry in the know of how these new guidelines will negatively impact businesses.

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Summary of the Situation

  • App stores have decided that all livestream one-to-few and one-to-many (i.e. classes and events), are now considered Digital Content and fall into the domain of In-App Purchases.

  • In-App Purchases will now charge a 30% fee on all revenue earned from said Digital Goods that allow access to Digital Content.

  • fitDEGREE will be implementing features to filter out these Digital Goods from certain mobile applications and hosting them solely on our Progressive Web App and other app platforms that have not implemented these egregious fees.

Making the Switch

What happened?

Back in September 2020, a tech giant decided that group fitness classes that were instructed via livestream were now considered “Digital Goods” and fell under their umbrella of influence by becoming an “In-App Purchase”.

In-App Purchases were typically reserved for app store games such as Angry Birds and CandyCrush. With the fitness industry going digital, a certain tech giant decided to seize the opportunity to audit additional industries to seek new revenue streams.

The ramifications of In-App Purchases have major consequences…

1)     All purchases for Digital Goods (i.e. memberships, packs and drop-ins), would now have a 30% fee by the app store, leaving you with only 70% of your revenue instead of the usual 97% after traditional processing fees.

2)     In-App Purchases would make it so you, the merchant, would have little to no control over the ability to apply refunds to these Digital Goods as well as give your clients the ability to manage gift cards and account balances.

As if that wasn’t enough, unfortunately there is more… With certain tech giants pushing for In-App Purchases, they also share in their guidelines that it is prohibited to encourage clients to make Off-App Purchases. Not only does this mean that we aren’t allowed to share on our mobile application that the purchases of Digital Goods can be found on our website version, BUT it implicates that we cannot use contact information (email and phone number) that was submitted during a mobile application account creation to make clients aware that Digital Goods can be found on outside platforms.

How will fitDEGREE respond?

fitDEGREE will NOT stand for this and will do everything that we can to SUPPORT small businesses.

To work within the guidelines imposed upon us, we can still move forward with the sales of traditional “In Studio” products, however we will be taking Digital Goods off of certain apps and moving them solely to our Progressive Web App version, found at https://app.fitdegree.com/ and other app platforms which are not imposing fees.

Moving these purchases to solely be on these platforms will allow your business to continue collecting the revenue you earned and rightly deserve.

This also means that we will have to move account creation to the a website widget as well so that if we were to be audited, we can justly say that all contact information was submitted through our private fitDEGREE platform. That way we can allow our clients to share any information regarding where to purchase Digital Goods with their clients.

While we recognize this as an inconvenience, we don’t believe that taking 30% of a small businesses’ revenue is fair or just. We also believe that you have a right to your client information and should use it as you see fit to contact them to perform sales and other outreach. At fitDEGREE we strive to be a progressive software dedicated to innovation and we would much rather have our focus be on helping our clients grow their businesses. We've decided that we will not give in to these bullies and allow them to change our view on how we should service our fitFam.

What are the next steps?

In an effort to build a brighter and more fair future, we have submitted a membership application to the Coalition for App Fairness (https://appfairness.org/). The Coalition for App Fairness is an independent nonprofit organization founded by industry-leading companies to advocate for freedom of choice and fair competition across the app ecosystem. You can read our membership application submission here - LINK. We will keep you posted as things progress.

This is an unfortunate situation, but as entrepreneurs and business owners, we are faced with difficult challenges time and time again. We appreciate your support throughout this time and hope that you understand and agree with the decisions that we are making to navigate this hurdle.

Keep up to date with how fitDEGREE is
navigating this topic by joining our private
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Frequently Asked Questions
by fitDEGREE
Clients

Disclaimer that all of the following answers are based on our current knowledge of the situation and that unfortunately, any of these answers can change in the future depending on how these tech giants continue to enforce changes of their policies.

Can I redirect my impacted clients to the website platforms?

Unfortunately, you cannot. Part of the guidelines include that you cannot redirect your clients on the impacted mobile applications to make “Off App Purchases” that they consider to be In App Purchases.

Will clients be able to see virtual classes on the impacted mobile application?

This will be your choice. We have already added the button to your Admin that gives you the choice to either display your virtual classes as view-only or remove them entirely from the impacted mobile applications. You can find this in the App Settings section of your Setup.

In the Admin after I click that a Class is virtual, is that all I have to do?

That’s it! Our next update will be to automate the process of making all memberships and packs that contain virtual classes in their perks to a view-only status on the impacted mobile applications. Similar to class registration, they will be able to be purchased on the website versions of the platform.

What if my clients already have memberships or packs for virtual classes?

Registration for all virtual classes on the impacted platforms will be on a view-only status. All impacted mobile applications clients will either have to use the web browser version of the fitDEGREE platform or your website widget in order to make a registration.

When will the 30% fee be introduced to us?

Never! We plan on operating inside the guidelines by creating appropriate workarounds to avoid this fee.

Has the 30% been affecting us already?

To date, all of our clients have received 100% of their revenue from virtual classes, minus the traditional processing fees.

What is the Monthly Fee?

$150 for the ability to use fitDEGREE software and a $150 monthly add on for your branded app for a grand total of $300 per month. We don't do tiers ;)

Is there a Setup Fee?

Yes. There is a one-time setup fee for the 45 Day Trial Management Software. For the fitDEGREE experience you will pay a setup fee of $150. If you are having a branded app created there is an additional $150 charged for the app setup fee for a grand total of $300.

What are the payment processing fees?

fitDEGREE processing payments via the merchant processor Payrix. We offer competitive rates of 2.9% + $0.30 per transaction on credit cards (typed or swiped) and a flat $0.50 fee for ACH payments.

What other costs can be associated with fitDEGREE?

fitDEGREE itself has a two type pricing model. Branded apps are $300 a month and non-branded apps are $150. These are the costs associated with running your business via fitDEGREE.

Are there any discounts for new businesses?

Yes! We want to support new businesses entering the industry and provide them a 3 month, 50% off discount. New businesses are defined as a business that is just opening and does not currently have a management software in place.

Will I have help getting set up?

Yes, Yes, Yes! Our team is here to help you in any way we can! So… What do we offer you? As you kick off your fitDEGREE journey you will get 3 dedicated sessions with a member of our onboarding team. In these sessions you will have an initial onboarding, a follow up, and a launch strategy call. Now, we fully understand that no process is the same, so if you need additional time and checkin between calls, no sweat! We can do that!

What is the typical onboarding process?

The typical journey is 3 sessions of 45 minutes or less each. Session 1, your initial onboarding, your goal is to begin inputting your business model into the software with your Onboarding Specialist. Often you spend most of your time in Setup building your class and pricing model. In session 2, your follow up, the Onboarding Specialist will open with any questions you have from your work in the admin and then close out the educational process helping you discover discounts, reporting, client accounts, and how to process sales. In session 3 you will then talk strategy. Our team will provide you with templates for your launch for your clients, your team, and your social media! The goal is for you to have a minimum of 3 calls and leave the process feeling well organized and ready to take on the transition process!

If I wanted to get started today, how long until I am up and running?

We would love to have a simple X days or weeks answer to this, but the truth is that every process is different. So let’s break it down. A typical launch into a non-branded app can happen within 3 sessions. It is most often seen that these sessions are spread over 3 weeks, but you can also speed it up by doing multiple in a week if your schedule allows for this. A branded app launch though is contingent upon not only completion of 3 calls but also app creation. Our team always strives to have apps out by mid-month. Apps are created within the first week of the month and then approved by their app stores and then the studio can go live. Another reason a launch might move slower is if you request credit card data from your current software. This is a longer process which can take 2-3 weeks, so always consider this as well when planning your transition. Something else to consider is the complexity of your setup or personal schedule. Some clients can kick off after 3, 45 minute sessions, and others have additional checkins between their calls because they did not have as much time per day or week to dedicate to getting their business model into the admin. The truth is, you can go as fast or as slow as your schedule allows with added constraints of 1) a branded app creation timeline, and 2) any requested data being needed from your current software.

What’s included in the free data transfer?

fitDEGREE includes the transferring of your client list, your packs, and your memberships as a free service. fitDEGREE will also include credit card information transfer as a free service when entering the software.

When will I need to pay for a data transfer?

When transferring over packs and memberships it is important that your clients have a client ID associated with them during the import process that we can use to connect their credit card, packs, and memberships to them. If you’re unable to work with our automation tool by having client IDs, then the cost associated with a manual data transfer for client pricing options is … 1 to 250 clients = $100 --- 251 to 500 clients = $200 --- 501 to 750 clients= $300 --- 751 to 1,000 clients= $400 --- 1,001+ clients = $500

What additional costs outside of fitDEGREE should I consider while transitioning?

Something to consider is the costs of any additional integrations you utilize as well as your payment processing. Payment processing occurs per transaction on fitDEGREE and can be calculated as 2.9% + $0.30 per transaction on credit cards (typed or swiped) and a flat $0.50 fee for ACH payments. Integrations though are up to you. Additional associated costs with running your business via fitDEGREE would depend for example on what emailing platform you choose to integrate. So be sure as you plan your transition to consider the costs of fitDEGREE, the costs of payment processing, and the costs of any integrations you feel you cannot live without.

What does customer support look like?

Our support team might be small, but it is mighty! Support for us is all-hands-on-deck. Monday through Friday you can count on a team member monitoring the support channel between 9am-5pm. Our team also performs weekend check ins but places priority on tickets which require more immediate attention. On any given day you can contact us via email at support@fitdegree.com or pre-schedule a support video chat with the team at https://calendly.com/fitdegree/support You can also contact our team members by phone, but we recommend email and pre-scheduled video calls for best service. Why? Because our team can provide the additional visual aids and clarification via these methods that we feel phone conversations tend to lack.

Learning To Pivot

From COVID-19 to the California Wildfires, 2020 was the catalyst that taught Jennifer how to pivot.

“The amount of pivoting we have done this year is crazy to think about; however, I am happy and proud to say... We never closed once!”

All throughout 2020, Perfect Union remained open in one way or another. After just one day of mandated shut down, Perfect Union had set up virtual classes and was operational the very next day.

For Jennifer, it was easy to pivot because she knew people were counting on her to keep them healthy and sane during 2020. She believes that, as a studio owner, there is so much gratification when you see people transform their lives right in front of you and she doesn't want to see her clients regress and lose all of the progress they’ve made.

So she did what any studio owner with grit would do… She kept going.

“Community for us is creating a supportive environment. People become family here. We all know one another, we cheer each other on, and accept each person for where they are at in their journeys.”

Tips for the Transition for fitDEGREE Clients


1) fitDEGREE does provide a complete website version of our client facing app, also known as a Progressive Web App (PWA). This can be found by going to your Setup page and clicking on Widgets underneath My fitSpot. The link is in the top bar under App Share Link. This will lead your clients directly to your page without them having to select a fitSpot.

2) Implement any and all website widgets. We have already created website widgets for your Live Schedule as well as One-on-Ones and Announcements. This can be found in the same spot of your App Share Link. If you want to skip the widgets, you can actually put an iframe of your PWA on your website too! Check out the custom HTML code for this below, all you have to do is change “app-share-link-here” to your actual link.

<iframe src="app-share-link-here" height="500" width="700"></iframe>

3) If you currently display pricing items on your app, you can create a pricing page to your website with descriptions of all your memberships and packs and then attach your Share link. By clicking into each membership and class pack, there will be a custom share link for each pricing item. This will lead clients directly to a cart and allow them to complete their purchase.