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Apple Cuts Its App Store Commission to 15% for Developers Earning Less Than $1 Million

Apple Cuts Its App Store Commission to 15% for Developers Earning Less Than $1 Million

Apple today announced the launch of a new App Store Small Business Program that will cut the Cupertino firm’s cut of the action in the App Store for small developers. Beginning January 1, 2021, Apple will cut its commission to 15%, down from 30% for developers who earn less than $1 million.

The 15% commission rate applies to paid app purchases, in-app purchases, and in-app subscription fees.

“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.”

While more details will be released in early December, the essentials of the program’s participation criteria are as follows:
  • 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.

Apple says the reduced App Store commissions are being put into place to aid small business owners to maintain their businesses and accelerate innovation during uncertain times.

The fee changes should relieve at least some of the pressure Apple is feeling from developers that are unhappy with Apple’s App Store fees. Apple has faced lawsuits from developers, as well as scrutiny from U.S. antitrust regulators.

However, large developers, such as Epic Games, will likely continue to complain, as they will not benefit from the changes.

Apple says small developers “see a world of possibilities” with the new App Store Small Business Program.

“This is a big opportunity for the indie gaming spirit to become truly mobile,” says Phillip Stollenmayer, a solo developer in the App Store. Stollenmayer, whose latest game, “Song of Bloom,” won an Apple Design Award in June 2020, was drawn to the appeal of iPhone as a new platform for gaming, one in its infancy and in need of its own set of standards. When his first game, “What the Frog,” launched in the App Store in 2013 and won a German Multimedia Prize (mb21), he knew he was onto something.

“I saw a whole world of possibilities and how easy it was to get something out there,” Stollenmayer says. “I had the chance to shape how mobile games work and how they differ from consoles. With mobile games, you use the phone in a much more personal way. I put that inside my games and make that active as gameplay, which is much more valuable than trying to create worlds that might not work so well on a small screen.”

Samantha John, co-founder of Hopscotch, which was the first coding language designed for iPad, sees the new App Store program as an opportunity to allow kids to do more with Hopscotch for free. “It actually allows us to take some risk that we wanted to take but we were pretty afraid to,” John says. “Specifically around our subscription, … I think it is a good strategy in terms of making money, but it also limits the audience of the app. And we’ve been wanting to walk back that paywall and let people do more for free in the hopes that farther down the line we will have even more loyal subscribers to Hopscotch.”

Started as a way to introduce programming to kids who wouldn’t otherwise be exposed to it, Hopscotch is the brainchild of John and co-founder Jocelyn Leavitt, who attended Apple Entrepreneur Camp’s inaugural class of female entrepreneurs in 2019.

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