On January 1st, Apple is set to launch the 'App Store Small Business Program'. The plan is set to reduce the commission developers are required to pay when selling apps on iOS and Mac App Stores. This means that newer and smaller developers will have lower costs as they hope to become successful on the platform, but the reduction won't be available to all developers.
With the COVID-19 pandemic remaining an integral part of life, many app developers are still limited in funds, resources, and/or manpower for creating and updating their apps at a normal pace. In places around the world, there are restrictions that prevent such businesses from working at full capacity. Even before the pandemic, however, Apple faced criticism from companies such as Epic Games and Spotify for their fees being too high, with some developers creating a workaround for how customers pay them in order to avoid Apple's commission. This has left Apple in a conundrum where they find companies both large and small taking issue with their policies. Thankfully, they are addressing problems for at least one of these two groups.
With Apple's new plan, eligible developers can get the App Store commission they pay reduced to 15 percent. Until now, Apple took a 30-percent commission for all apps sold in the App Store, regardless of earnings or the size of the companies making them. Developers accept this steep commission for the benefit of selling into Apple's large and growing market. By halving the commission it takes, Apple says it hopes "small developers and aspiring entrepreneurs will have more resources to invest in and grow their businesses in the App Store ecosystem."
Who Can Participate In Apple's Small Business Program?
The 15-percent commission taken by Apple will only apply to companies that made less than $1,000,000 in sales in the past calendar year — from either costs for the app itself or in-app purchases. According to Apple, $1,000,000 was the bar decided upon as apps tend to surge in popularity once developers make that much money. If a developer manages to make $1,000,000 in a calendar year, the change to 30 percent will take effect for the following year, but developers can fall back to the 15-percent commission should they fail to hit the milestone after reaching it the previous year.
The reduction in commission fees is great news for startup and small businesses that may need to be trying to minimize their outgoings while trying to generate income through the App Store. However, the plan does no favors for Apple's more-successful partners, including those that have called the company out for its steep fees. As these companies will continue to pay a 30-percent commission, Apple will be at continued risk of dispute with them, with the worst-case scenario being that they could leave the App Store altogether, benefitting marketplaces for Android and other platforms. Hopefully, Apple will come to an amicable agreement with its bigger third-party partners that will keep both parties and end-s happy.
Source: Apple