Apple today announced the launch of a new program called the App Store Small Business Program, which aims to reduce fees under certain conditions.
Apple announced the App Store Small Business Program in a press release and explained that under certain conditions the App Store fees will be reduced. Small companies that generate less than one million dollars in sales will pay around 15 percent commission instead of the previous 30 percent. The new commission rate will apply from January 1, 2021 and includes app purchases, in-app purchases and subscriptions. The press release:
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 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 no other, creating millions of new jobs and a path to entrepreneurship that's accessible to anyone with a great idea. Our new program takes that progress further — helping developers fund their small businesses, take risks on new ideas, grow their teams, and continue building apps that enrich people's lives.
App Store Small Business Program: Commission can be increased to 30 percent
All developers who earned less than $1 million in 2020 can qualify for the program and the reduced 15 percent commission rate. New developers who join the App Store and create apps in 2021 can also qualify for the program. Going forward, developers who earned up to $1 million in the previous calendar year will also be eligible to participate. Developers who earn more than $1 million are not eligible, with the total $1 million calculated based on post-commission revenue, which takes into account total revenue after Apple's usual 30 percent cut. Developers who earn more than the threshold will continue to pay the standard 30 percent commission rate. If a developer exceeds the $1 million threshold, the commission will increase to 30 percent.
App Store: Fee structure for subscriptions remains
For example, a developer who enters the program in 2021 and earns more than a million dollars in the middle of the year will have to pay 30 percent commission for the rest of the year. This will also apply for 2022. If earnings fall below the million dollar threshold after that, that developer will be eligible for the program again in 2023. As for subscriptions, developers who are eligible for the program pay a 15 percent commission on active subscriptions in the first year. During the first year that a person subscribes, the standard commission rate is 30 percent. This drops to 15 percent starting in the second year. So this fee structure will remain in place, with participants in the Small Business Program only having to give up 15 percent from the start.
App Store: Fee changes help small developers
Apple says the reduced App Store fees are being implemented to help small business owners sustain their businesses and accelerate innovation during uncertain times. The fee reduction is being implemented as developers try to navigate economic challenges and more companies shift to digital as people continue to work and learn from home. The fee changes will come as a relief to many developers who were unhappy with Apple's App Store fees. Apple has already come under scrutiny from antitrust regulators in the United States. The investigations found that many developers believe Apple's fees are too high.
App Store: 1.8 million apps available worldwide
Today's fee reduction will not benefit some of the developers who have complained most loudly about Apple's commission rates, such as Epic Games. However, small businesses will benefit greatly from this program. There are more than 28 million developers from 227 regions offering apps through the App Store, with 1.8 million apps currently available worldwide. Apple said the program will be available to the majority of developers, with all of those developers receiving equal access to Apple's developer tools. Apple expects the App Store Small Business Program to generate more digital commerce, support new jobs, and provide more funding for small businesses to reinvest in their applications while they work to develop innovative software for Apple users. AirPods Pro on special offer at Amazon – available now. (Image: Apple)
