Apple today announced the launch of a new App Store Small Business Program that will see the Cupertino company lowering its App Store fees for small business owners and independent developers. Starting on January 1, 2021, all developers who earn less than $1 million from the App Store will pay 15 percent in commission to Apple, down from the standard 30 percent.
The 15 percent commission rate applies to paid app purchases, in-app purchases, and subscription fees, with the lowered rate benefitting most developers on the App Store.
"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," said Tim Cook, Apple's CEO. "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."
All developers who earned under $1 million in 2020 are able to qualify for the program and the reduced 15 percent commission rate. New developers who join the App Store and create apps in 2021 will also qualify. Going forward, developers who earn up to $1 million in the prior calendar year will be able to participate.
Developers who earn over $1 million will not be eligible, with the $1 million total calculated using post commission earnings that take into account total earnings after Apple's standard 30 percent cut. Developers earning more than the cutoff will continue to pay the standard 30 percent commission rate.
If a developer who participates exceeds $1 million in earnings, commissions will go back up to the 30 percent rate as well. For example, a developer who joins the program in 2021 and exceeds $1 million in earnings mid-year will need to pay out 30 percent commission going forward for the rest of the year. This will also apply in 2022, but if after that revenue falls below the $1 million threshold, the developer will be eligible for the program again in 2023.
As for subscriptions, developers who are eligible for the program will pay a 15 percent commission on subscriptions, even during the first year. Apple already has mixed App Store fees for subscriptions. During the first year a person subscribes, the standard commission rate is 30 percent, but it drops to 15 percent after that. That fee structure remains in place, but Small Business Program participants will pay 15 percent for all subscribers.
According to Apple, the reduced App Store fees are being implemented to help small business owners maintain their businesses and accelerate innovation during uncertain times. The fee drop is being implemented as developers try to work through economic challenges and more and more business are pivoting to digital as people continue to work and learn from home.
The fee changes will be a relief to many developers who have been unhappy with Apple's App Store fees. Apple has faced scrutiny from U.S. antitrust regulators in the United States, and investigations conducted by those regulators have surfaced complaints from developers who believe Apple's fees are too high.
Today's fee cut won't benefit some of the developers that have been the most vocal about Apple's commission rates, such as Epic Games, but it will relieve some of the pressure on the small business owners that need the most help.
There are more than 28 million developers from 227 regions who offer apps through the App Store, and 1.8 million apps available worldwide. Apple says that the program will be available to the majority of developers, with those developers all receiving the same access to Apple's developer tools and programs. Apple expects the App Store Small Business Program to generate more digital commerce, support new jobs, and provide more funds for small businesses to invest back into their apps as they work to create innovative software for Apple users.
