Apple announced a new App Store Small Business Program on Wednesday. Launching January 1, 2021, It will slash App Store fees from 30 percent to 15 percent for many developers. Firms that earned $1 million or under in 2020 across all their apps will qualify for the program.
Apple Launching App Store Small Business Program, Cutting Commission in Half
Commenting on the launch of the App Store Small Business Program, Apple CEO Tim Cook said:
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. 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.
How The App Store Small Business Program Works
A developer who surpasses the $1 million threshold will be subject to the standard commission rate for the remainder of the year. However, if a firm’s income from the App Store was above $1 million then falls below it, they can re-qualify for the 15 percent commission the following year. As standard, Apple takes a 30 percent cut on App Store sales and in-app purchases. This does fall to 15 percent for subscriptions after a user’s first year. Very few firms are able to bypass this. However, Apple does have some, most notably with Amazon. (For example, you can buy or movies via the company in-app, not using Apple’s payment methods, but you cannot purchase an audiobook from Amazon-owned Audible on your iPhone).
Not Everyone Happy With ‘Apple Tax’ Change
The so-called ‘Apple Tax’ has been a big point of conflict with various developers of all sizes, most notably, Epic Games. However, not everyone was won over by Apple’s announcement. Basecamp CTO David Heinemeier Hansson, a frequent critic of Apple’s policies, tweeted:
Apple continues to push the benefits of participating in the App Store. It pointed out that there are over 1.5 billion Apple devices in 175 countries around the world. The App Store is available in over 40 languages. also accepts over 180 local payment methods and 45 currencies.
15% really makes more sense for the long term health of the developer community. It should just always be 15%. Developers work hard to bring their creations to life. Then they work very hard to keep them maintained and updated. It is really in Apples long term interest to keep their share lower.
Perhaps that would encourage some of the great hold-outs to the App store to come onboard.
This is a very good move. 30% made sense when things were getting started and had to be built from the ground up. It’s up and running now, this will help a lot of developers.
Now to end Apple’s commission on sales that don’t go through their store.