Apple cuts App Store commission to 15pc for small businesses

Ruben Fields
November 18, 2020

If a developer who is part of the App Store Small Business Program makes more than $1 million during a year, the commissions paid for the remainder of the year will be at the 30% rate paid outside the program and the developer won't be eligible for the program the following calendar year.

Earlier this year, Apple got into a bit of a kerfuffle over the cut it takes from the revenue of apps like Fortnite.

Apple said the new programme will start on Jan 1 and it will give more details on which developers qualify next month.

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. The list of requirements and the information regarding the process will be released by Apple in December 2020.

The new program will launch on January 1, 2021, and will be based on the business's revenues in the previous calendar year - meaning 2020.

If a developer who participates exceeds $1 million in earnings, commissions will go back up to the 30 percent rate as well.

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A developer that is not eligible for the App Store Small Business Program will be eligible the calendar year following any calendar year that they earn less than $1 million.

Apple CEO Tim Cook described the move as a way to support small businesses that are a "backbone of our global economy and the beating heart of innovation and opportunity in communities around the world.".

The App Association, a group sponsored by Apple, said in a statement that the "reduced commission for small businesses will allow them to put additional resources towards scaling up and innovating new products and services". Data from Sensor Tower reported by the New York Times suggests the measures would impact 98% of Apple's developers that pay a commission (84% of developers do not), but that those developers only account for less than 5% of Apple's App Store revenue.

"This is a big opportunity for the indie gaming spirit to become truly mobile", said indie developer Phillip Stollenmayer, known for Apple Design Award victor Song of Bloom.

Despite the lowered commissions, there are no planned changes to the services offered by the Apple Developer program as a whole. It is our understanding that App Store earnings of all kinds count toward the $1 million total regardless of whether the source is a paid-up-front app, In-App Purchase, or a subscription. The new programme is speculated to help small and independent developers generate even more digital commerce through their apps and games.

The move also assumes significance as Apple has been aggressively expanding its presence in the Indian market that is home to a large developer base.

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