Apple To Charge 50% Less Commission From App Developers

Nov 18, 2020
Apple App Store
Image: Apple

Facing flak for App Stores 30 per cent standard commission for paid app revenue and in-app purchases, Apple on Wednesday unveiled a new developer program that will reduce the charge by half for small businesses that earn up to $1 million in revenue from January 1.

Apple said the new “App Store Small Business Program” will benefit the vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases.

To be launched on January 1, the program comes at an important time as small and independent developers continue working to innovate and thrive during a period of unprecedented global economic challenge.

The program’s reduced commission means small developers and aspiring entrepreneurs will have more resources to invest in and grow their businesses in the App Store ecosystem.

“We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love,” Apple’s CEO Tim Cook said in a statement.

“The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea. Our new program carries that progress forward – helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”

Existing developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.

If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year, Apple said.

If a developer’s business falls below the $1 million threshold in a future calendar year, they can re-qualify for the 15 per cent commission the year after.

The App Store’s standard commission rate of 30 percent remains in place for apps selling digital goods and services and making more than $1 million in proceeds, defined as a developer’s post-commission earnings.

Every week, half a billion visitors to the App Store engage with 1.8 million apps, from indie games like “Song of Bloom,” to virtual fitness coaches like MySwimPro, to coding apps for kids like Hopscotch.

Most of the developers of these apps are happy with Apple’s new program.

“The new App Store Program will be a huge help to our revenue from purchases in the App Store, and we’re hoping to be able to leverage any more proceeds we get to help make the app better,” said Adam Oxner, Co-founder and Chief Technology Officer of MySwimPro.

The new reduced commission rate for some developers come after Apple faced criticism from different quarters for App Store’s standard 30 per cent cut.

The controversies surrounding the commission includes the launch of a European antitrust investigation into the App Store and Apple Pay and a legal battle with Epic Games over the inclusion of the game maker’s own in-app payment options in Fortnite, among others.