Apple Reduces App Store Commission to 15% For Small Developers

After long being criticized for its 30% App Store commission, Apple today announced its new App Store Small Business Program under which the company will be lowering the commission for smaller developers. The program starts from January 1, 2021, and for all eligible developers earning less than $1 million, Apple will charge them 15% in commission.

Developers who have earned less than $1 million in the previous calendar year after deduction of the App Store commission fee can apply for the program. The reduced 15% commission will be applicable for paid apps, in-app purchases, and subscription fees. Apple already charges developers a 15% commission for subscription in the second year but for small developers, the 15% rate will be applicable from the first year itself.

Apple says by reducing the commission fees, it is providing developers with more resources to invest in their business and the App Store ecosystem. The reduced commission will also help smaller developers in these uncertain times.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. 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,” said Tim Cook, Apple’s CEO. “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.”

Apple will release the entire details of its App Store Small Business Program in early December. However, it has highlighted the main requirements for developers to be eligible to qualify for the program:

  • 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.
  • If a developer’s business falls below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the year after.

It is important to note that the $1 million revenue is calculated by Apple after taking its cut. For developers generating more than 1 million in revenue and selling digital goods, the 30% commission will remain.

Our Take

This is a big move from Apple and one that it has likely taken due to the pressure that it has been subjected to from various developers and regulatory bodies over the last few months. However, the reduced commission won’t really benefit major app developers who have been the most vocal about Apple’s 30% commission including Spotify and Epic Games. Nonetheless, the reduced commission should be welcome news for small developers on the App Store.

[Via Apple]