27 November 2020
Apple has announced a special program for small developers to help them earn more money. It is called App Store Small Business Program that drops the App Store commission to 15% for developers who make less than $1 million in a year. The announcement has come at the right time as the Cupertino-based tech giant has been at the receiving end of complaints accusing it of abusing its power to dictate terms of developers as well as being anti-competitive.
The standard App Store commission is 30% for all paid apps and in-app purchases available through the platform. It has to be paid by all developers regardless of their userbase and revenue. But starting January 2021, it will have to be paid by only those devs who make over $1 million annually. Apple will consider last year's revenue for deciding which developers qualify for the program and the best part is that post-commission revenue will be used. All new developers publishing their first apps will be a part of the program from the beginning.
If any developer ends up crossing the $1 million threshold during the year, that account will automatically be switched to the standard 30% App Store cut. In case the revenue again falls below $1 million, those devs can choose to re-apply for the program to avail the benefits. It should be noted that for devs with multiple apps on App Store, total earnings from all the apps will be counted for determining the qualification.
The official press release mentions that the program will be explained in-depth in early December. Apple has only given a basic idea of the eligibility criteria but we should wait for the full-fledged announcement to understand everything. An official number has not been released but as per Sensor Tower, the program would benefit 98% of all App Store developers who collectively contribute just 5% of overall Apple revenue.
Tim Cook, CEO of Apple 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.”