Apple will cut App Store fees from half to 15% for young developers

Apple CEO Tim Cook speaks at the Apple Worldwide Developers Conference (WWDC) at the San Jose Convention Center in San Jose, California on Monday June 4, 2018.

Josh Adelson | Agence France-Presse | Getty Images

Apple on Wednesday announced that it will lower the App Store commission rate to 15% for software developers whose annual net sales are less than $ 1 million.

Apple currently takes a 30% commission from the total price for paid apps and in-app purchases from the App Store. For some small app makers, the new policy could cut the amount they pay Apple in half.

Apple says the App Store Small Business program will start on January 1 and that eligible developers will receive reduced app store fees for paid and in-app purchases. New developers who have never published on the App Store before will qualify for a 15% lower commission.

The move is an olive branch from Apple as lawmakers around the world are increasingly focusing on its app store business practices, and it’s the only way for most people to install software on an iPhone or iPad. A report by the House of Representatives’ Judicial Subcommittee on Antitrust, published in October, stated that Apple produces “Profits above normalFrom the App Store.

The new program is intended for young developers who are earning less than $ 1 million annually across all of their apps on the Apple App Store, following Apple’s fees. Apple has said that once the developer exceeds this limit, it will be charged the standard 30% rate. If their sales subsequently fall below $ 1 million in a calendar year, the lower commission can be recovered. Apple said it would disclose more details about the reduced commission terms next month.

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Wednesday’s announcement is separate from Apple’s 15% lower fees in the second year of subscriptions billed through the App Store, which also applies to major companies and was implemented in 2016.

Apple said last month on Annual deposit with SEC Reducing the app store commission rate may harm the company’s financial results. App Store revenue is a major part of Apple’s services business, which generated $ 14.55 billion in the quarter ended September, representing 22% of the company’s revenue for the period.

But Apple will still charge a 30% fee for in-app purchases for the highest-paying apps, which means the impact on Apple’s financials may be minimal. Additionally, a maximum discount has been set for each publisher, because the commission returns to 30% after the sale after Apple fees exceed $ 1 million.

Apple says there are about 1.8 million apps on the App Store, but the apps are the business that wins. The top 1% of app publishers generate 93% of revenue across the App Store and Google Play Store, according to a 2019 estimate from Application analytics company Sensor Tower.

The change will help small businesses that offer virtual lessons or sessions through an app, which have fixed costs like instructor time and have grown in importance during the Covid-19 pandemic. In a separate post on its website, Apple highlighted the swimming coach app, coding app for kids, and standalone game as companies that could benefit from the policy change.

Apple doesn’t charge commission on physical goods purchased through apps, like booking a personal classroom or Uber. But it considers classes or other events held online, such as a virtual yoga session, as digital goods and is subject to a commission fee. The fees were suspended until the end of the year after a tumultuous public dispute with Facebook.

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The changes are unlikely to appease Facebook or Fortnite maker Epic Games, who have been implicated in a Legal battles with Apple Above 30% company fee and related practices. An estimate from August suggested that Epic Games have it It made more than $ 1.2 billion On the App Store yet, which makes it ineligible for the discounted commission.

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