Christmas just came early for small developers who distribute their apps on Apple’s App Store. That’s because the iPhone giant has unexpectedly announced it will soon halve the commission fee it takes from some developers when they sell an app, or in-app purchase, on the App Store. The move comes with the announcement of a new App Store Small Business Program, which qualifying developers can join. Once accepted into the program, Apple will reduce the fees on digital purchases of their apps and IAPs from 30% to just 15%. That means those developers will soon take home 85% of all purchases received instead of the current 70%.
In order to qualify, a developer must have made $1 million or less in App Store revenue from all of their apps combined in 2020. If they made $1 million or less, Apple considers them a “small business” and eligible for the reduced fees. As Apple noted in an announcement regarding the new program:
The App Store Small Business Program, which will launch on January 1, 2021, comes at an important time as small and independent developers continue working to innovate and thrive during a period of unprecedented global economic challenge. Apps have taken on new importance as businesses adapt to a virtual world during the pandemic, and many small businesses have launched or dramatically grown their digital presence in order to continue to reach their customers and communities. The program’s reduced commission means small developers and aspiring entrepreneurs will have more resources to invest in and grow their businesses in the App Store ecosystem.
Apple also noted that if a developer qualifies for the App Store Small Business Program and subsequently goes on to make more than $1 million the following year, the old 30% commission fee will apply for the remainder of that year (not what came before). If in the following year the developer then makes $1 million or less again, they can reapply for the App Store Small Business Program. Apple’s halving of its commission fees for small developers will be seen as a huge olive branch to its development community—and could go a long way in assuaging some lawmaker’s concerns that the company has too much power with its App Store platform.
Announcing the upcoming fee reduction, 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.”