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Apple Introduces Reduced Commission For Small Business

  • Rating — 5 (2 votes)
  • by Ksenija Kolomiiets
  • Updated on November 30, 2020
  • Read —
    2-3 minutes

A few months earlier, Apple announced that from January 1, 2021, it would charge developers who post their applications to the AppStore. This statement caused a storm of anger because this year was not easy for many companies, and it is not clear what will happen next year.

The Epic Games scandal against Apple was especially noted, where the commission was named the main argument for leaving the App Store. Perhaps thanks to this scandal or antitrust hearings – Apple nevertheless decided to cut the commission on app sales from 30% to 15% for  developers in the App Store in half.

The company says it has decided to lower the commission rate to support small businesses. It means that the preferential commission will only apply to those developers whose turnover is less than $ 1 million per year. The commission will be the same 30% in other cases, but many developers welcome this step from Apple. Young developers who decide to put their first app on the App Store will earn more. Since the turnover of a small company rarely reaches $ 1 million.

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This change will help small businesses that offer online services in apps. Apple does not charge fees for physical items purchased through in-app purchases, such as a pair of sneakers in an in-app store or a taxi ride. However, various activities online, such as a yoga session on the Internet, are considered by Apple to be digital goods and are subject to fees.

Learn more about App Store fees

According to App Annie research, about 98% of all iOS developers in 2019 (i.e., individual publisher accounts) fell below the $ 1 million annual consumer spending threshold, which will drive App Store commissions down from 15% down to a standard 30%. %. It was also a discovery that only 0.5% of developers earn between 800 and 1 million dollars; only 1% was in the range from 500 to 800 thousand dollars, and 87.7% earned less than $ 100,000.

Appfigures last week released a forecast of how Apple’s changes in App Store fees will affect the app developer community. And so, according to the data of 2 million applications in the App Store, only 376 thousand have in-app purchases or are monetized through subscriptions. And most importantly, this 18.5% of applications are served by 124.5 thousand developers, of which only 2% earned more than $ 1 million in 2019.

Image Credits: Appfigures

It also becomes clear from the report that games, social networks, fitness and health, and other applications are significantly inferior to them in profitability.

As for the size of income, the average income among those who earn more than a million falls on the group from 1 to 2.5 million dollars in 2019.

Image Credits: Appfigures

The smallest group (1.5%) of developers earning over $ 1 million is the group earning over $ 150 million.

Apple took this step at the right time, as lawmakers worldwide have recently been focusing more and more on the App Store, which for most people, is the only way to install software on an iPhone or iPad. A report by the House of Representatives Judicial Subcommittee on Antitrust Law, released in October, said Apple is making “excess profits” from the App Store.

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Check up our article How to submit an app to the App Store and Google Play? Where we described our real experience
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Do you think Apple did the right thing?
Ksenija Kolomiiets Expert & Evangelist in business optimization tools like fintech, logistics, on-demand services apps who will help you to understand the core ideas of the outlined themes by my articles. I also have great expertise in social media and education platforms so let me know "in comments" if you want me to describe a theme you're interested in.

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