Android app revenue recognition

Update 30 April 2011:  Conventional wisdom is that you should try to write blog content that is time insensitive. But, in this case, I am very happy to report that the content of my original post here is essentially obsolete.

I just noted a new post on the Android blog announcing the new Merchant Sales Report available on the Android developers  console.  This downloadable csv-format report makes all of the machinations described below unnecessary. I was just able to download the report, upload it into a Google Docs spreadsheet, change the sort order to separate out my sales by product, and voilà!, I could produce the sales by product numbers that I need for revenue recognition.

Thank you Google!

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I really like the Android App Marketplace back office tools as compared to the Apple iTunesConnect Marketplace. Android sales reports are clean and readable and Google just plinks money down into my bank account as I earn it. No incomprehensible trend reports (‘only an estimate . . . Actual amount may vary’) and no waiting for monthly accumulated earnings.

But the Google approach does present a couple of problems if you a) like to balance your business checking account every month and b) have more than one paid app and want to be able to account for sales by product. We do both.

It took me a while to piece together a month-end reconciliation system that works for me, so I thought I would share. And, frankly, this will save me from having to search through my email every end-of-month for the notes I mailed myself.

Big disclaimer:  This process works right now because I have two paid apps with different prices.  When I publish more apps and end up with two with the same price, I won’t be able to distiguish apps by price and I’d have to do something more complex.  Or maybe Google will improve the back office reports available by then and none of this will be necessary.

Small disclaimer:  The description assumes you’ve got some kind of online access to your Google-linked bank account and that you use an accounting package such as Quickbooks.  If not, variations are left as an exercise for the reader.

  1. The first step is to get the total dollars deposited by Google in your bank account last month.  Depending on the online tools your bank gives you, it may be easier to do a search for Google transactions for the right date range and just scrape the total dollars number off the screen or it may be easier to download all your transactions as a csv, open the file in a spreadsheet, delete the non-Google transactions, and total them.
  2. From the Google Developer Console (http://market.android.com/publish/Home?pli=1), click View Merchant Account.  Using the control on the bottom of the Payouts tab, download Payout Details for the month to a csv.
  3. Open the downloaded payout details csv in your spreadsheet of choice.  Transactions show up in pairs (Purchase and matching Fee).  Sort the spreadsheet by amount.  Mark each transaction by product; I just re-use the subtype field which is blank for all my transactions.  I mark my $3.99 purchases and -$1.20 fees as PWRN (PasswordRN) and the $1.99 purchases and -$.60 fees as PlacPlus (Placards Plus).
  4. Sort the spreadsheet again by Subtype, PayoutDate, and Date.  Insert a couple of blank lines between the product sections.  Total the amounts for each product and then add those totals together to get a total payout amount.  That total payout should be the same as the bank account total you got in step 1 above.  If it is not, carefully check the bank deposits and verify that the first and last payouts of the month actually got recorded by the bank on days within the month.  There can be a day or two lag between the google payout date and the bank deposit date and I haven’t found any way to fix this except to eyeball them carefully if the totals are different and make a manual adjustment.
  5. Enter the two product amounts into your accounting package as two software sales transactions.  The date doesn’t particularly matter as long as it falls into right month.  I use the last day of the month.
  6. When you reconcile your bank account statement against your accounting package, just mark all the Google transactions for the months as ‘cleared’.  Since you’ve made sure that the total sales dollars recorded as deposited in your accounting package are the same as the total dollars that will show up on your bank statement, you’ll reconcile just fine.

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