Apple cuts App Store commission by 15 percent for most developers
Apple on Wednesday announced a new developer program under which it lowered the App Store commission rate to 15 percent, half of the standard 30 percent cut it takes on paid apps and in-app purchases. The new initiative, called the App Store Small Business Program, is open to developers making up to $ 1 million (approximately Rs. 7.41 crore) in annual sales per year from all of their apps. Apple says its latest move will benefit a “vast majority” of developers. However, the number of developers who meet the eligibility criteria for the new program has yet to be revealed.
The App Store Small Business program will go live on January 1, 2021. Apple will make it available to existing developers who made up to $ 1 million in 2020 for all of their apps, as well as developers new to App store. In the event a participating developer exceeds the $ 1 million threshold, the standard commission rate will apply for the remainder of the year. Additionally, if a developer’s business falls below the given threshold in a future calendar year, Apple said it could re-qualify for the 15 percent commission rate the following year.
Details on the new program will be provided in early December. In the meantime, it’s important to note that developers eligible to take advantage of the reduced commission rate will need to sign up for the benefit. This means that Apple will not automatically apply the new fee to eligible developers.
“The App Store has been an engine of economic growth like no other, creating millions of new jobs and a path to entrepreneurship accessible to anyone with a great idea,” said the Apple CEO. Tim cook in a prepared statement. “Our new program takes that progress forward, helping developers finance their small businesses, take risks with new ideas, expand their teams, and continue to create applications that enrich people’s lives.”
Apple has been faced with a outrage from the developer community as much as regulators for their 30 percent commission that has been in place for quite some time. Companies included Base camp and Spotify have also hit the iPhone maker by taking the cut of all purchases that users make through the App Store or in-app purchases are made through their applications.
However, Apple’s commission does not apply to all developers. Exempted companies, including Amazon and Facebook at some point or another. But those deals were not publicly announced. In late 2016, Apple also offered a 15 percent discount on its subscription service commission, especially for subscribers who stay on board for more than 12 months.
But so far, Apple kept his position receivable the 30 percent cut. That rigidity helped the company expand its revenue from the App Store.
According to a report By app analytics firm Sensor Tower, the App Store generated $ 32.8 billion (approximately Rs. 2.43.3 billion) globally from in-app purchases, subscriptions, and paid apps and games in the first half of 2020. This was 24.7 percent more a year year-over-year from the $ 26.3 billion (roughly Rs. 1.95.1 billion rupees) generated during the same period in 2019.
In 2019 alone, Apple said that the App Store facilitated $ 519 billion (roughly Rs. 38,49,500 crore) in commerce worldwide, with more than 85 percent of that total coming from third-party developers and companies from all sizes. It is speculated that the new program will help small, independent developers generate even more digital commerce through their applications and games.