Apple is trimming App Store commission fee to 15 percent for devs that make less than...

Shawn Knight

Posts: 12,692   +124
Staff member
TL;DR: Full details of the program will be shared in December, we’re told. For now, Apple said that existing developers who made up to $1 million in 2020, as well as new developers, can qualify for the program. If a dev surpasses the $1 million mark, the standard commission rate will apply for the remainder of the year. Should a developer fall below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the following year.

Apple on Wednesday announced a new program that could reduce the commission a developer pays by half.

Under the new App Store Small Business Program, developers that earn less than $1 million in annual sales can qualify for a reduced commission rate of 15 percent (down from Apple’s standard 30 percent cut).

Apple plans to launch the new program on January 1, 2021, noting that the reduced commission will provide small developers and aspiring entrepreneurs with more resources to invest in and grow their businesses in the App Store ecosystem.

Apple didn’t share specifics but said the program will benefit the "vast majority" of developers that sell goods and services on the App Store.

According to CNBC, Apple's App Store generated roughly $50 billion in revenue in 2019.

App analytics firm Sensor Tower told The New York Times that the change will impact roughly 98 percent of developers but that those developers collectively accounted for less than five percent of total App Store revenue last year.

Image credit: BigTunaOnline

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Plutoisaplanet

Posts: 333   +405
If a dev surpasses the $1 million mark, the standard commission rate will apply for the remainder of the year. Should a developer fall below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the following year.
Interesting, so if you make 1.2m one year and 0.8m the next, then the developer would pay 15% for the first million and 30% for the second, before returning to a 15% rate for a third year.

If it was like US federal tax income brackets (also known as a graduated rate, which is simpler), that developer would only pay for 30% on $200k and 15% for the rest. It would also mean that all major developers would save $150k in fees (or 15% of the first million) but any developers who made less than $1m would save less than $150k.
 

Shadowboxer

Posts: 978   +579
So now Google charge developers more than Apple do..

We are living in a backwards world, Android was supposed to be free and open source wasnt it!
 

brucek

Posts: 577   +700
TechSpot Elite
Nice but doesn't really make sense. Some of Apple's expenses are fixed and for that reason you'd expect they need the higher margin for the smaller developers, not the larger ones. I'd have expected the margin to get smaller as the volume grew higher, which is how almost everything else works.
 
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Endymio

Posts: 1,079   +900
Nice but doesn't really make sense. Some of Apple's expenses are fixed and for that reason you'd expect they need the higher margin for the smaller developers
Exactly what I was thinking. Perhaps the rationale is that, by giving additional support to those smaller developers, they encourage better growth in their own ecosystem?
 

Uncle Al

Posts: 7,597   +6,114
While it might deflect some of the issues, the PA's will go back a lot further than current practice .... and they have a LOT to answer for .....
 

Puiu

Posts: 4,145   +2,785
TechSpot Elite
Yep, seems like Epic pressure gave fruit :)
Not really. Epic doesn't benefit by this at all. It's most likely a response to the two antitrust investigations by the EU into Apple Store and Pay. That's where they risk getting huge fines, in the hundreds of millions or even billions of $$ range. It's actually Spotify that started this.
 
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etempest

Posts: 48   +32
So now Google charge developers more than Apple do..

We are living in a backwards world, Android was supposed to be free and open source wasnt it!
Apple see's the writing on the wall (legally), and this still allows them to collect %30 on the high income earners. They're hoping this allows them to make changes on their terms, vs a court dictating it to them.
 

Shadowboxer

Posts: 978   +579
Apple see's the writing on the wall (legally), and this still allows them to collect %30 on the high income earners. They're hoping this allows them to make changes on their terms, vs a court dictating it to them.
Absolutely, Apple have been very good at remaining out of the legislature’s crosshairs. Facebook on the other hand is in for a whole world of pain on several fronts.