Apple on Wednesday confirmed plans to cut App Store fees to just 15% for many of its developers.
The lower rate, which comes into effect in January as part of the new App Store Small Business Program, applies to those who earn less than $1 million a year in app revenue and in-app purchases.
Many have been calling for Apple to reduce its developer fees for years now. Since the App Store opened its doors in 2008, Apple’s cut has been fixed at 30% of all revenues, dipping only for subscriptions.
Now Cupertino is finally listening to those calls. Starting next year, Apple’s cut will be halved for the “vast majority” of app developers.
Apple cuts App Store fees in half
More than 28 million developers have signed up to build apps for iPhone and iPad. And Apple’s hefty 30% cut, which is the same as Google’s, generated an estimated $50 billion in revenue in 2019.
The App Store has become one of Apple’s biggest earners — a key player in its overall Services business. But big changes are on the way that could have a significant impact on that … at least temporarily.
As of January 1, 2021, developers who earn less than $1 million in App Store revenue will have to cough up just 15% of their earnings as opposed to the usual 30%. But there is a catch.
To qualify for the reduced fee, which is available to new developers right away, developers must apply to enroll in the App Store Small Business Program. Apple will not make the cut automatically.
More info on the way
Apple promised to provide more information in December, but laid out some of the rules in advance. The company will use 2020 revenues to decide which developers can enroll in the program next year. Those who exceed the $1 million threshold at any point will see their rates increase to the usual 30%.
Any developer who surpasses $1 million in earnings, then sees their revenues dip back below that threshold, can re-enroll in the program later and take advantage of the reduced rate again.
This is the first time Apple has made cuts to App Store fees across the board. The move will surely come as welcome news to the ever-growing and increasingly important developer community.
Why now?
The announcement comes as Apple faces antitrust investigations, both in the United States and abroad. The company is also engaged in a high-profile legal battle with Fortnite developer Epic Games over its App Store fees and policies.
According to The Verge, Apple is keen to distance itself from the controversy. It instead sells the App Store Small Business Program as a way to provide support during the ongoing pandemic.
