App StoreSource: Joe Keller / iMore

What you need to know

  • Apple is reducing its App Store commission rate for the 'vast majority' of developers.
  • It will now take 15 percent instead of 30 from developers who earn up to $1 million a year.

In huge developer news, Apple has today announced it will reduce its App Store commission rate from 30% to 15% for small businesses who earn up to $1 million a year in revenue.

In a press release today the company stated:

Apple today announced an industry-leading new developer program to accelerate innovation and help small businesses and independent developers propel their businesses forward with the next generation of groundbreaking apps on the App Store. The new App Store Small Business Program will benefit the vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases. Developers can qualify for the program and a reduced, 15 percent commission if they earned up to $1 million in proceeds during the previous calendar year.

The program will launch on January 1, 2021. Apple says the move will benefit "the vast majority of developers" who sell digital goods and services on the App Store. Apple said "comprehensive details" would come next month, but outlined the following:

  • Existing developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.
  • If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year.
  • If a developer's business falls below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the year after.

Apple says the standard 30% rate will remain in place for anyone earning more than $1 million in proceeds. Data from Sensor Tower reported by the New York Times suggests the measures would impact 98% of Apple's developers that pay a commission (84% of developers do not), but that those developers only account for less than 5% of Apple's App Store revenue. This is just an estimate however, and Apple has not officially provided any details.

You can read the full report here.

In an accompanying feature Apple has highlighted the reaction of some developers to the new program. From that piece:

With the new App Store commission structure, small and individual developers who earn up to $1 million in revenue for the calendar year are eligible for a reduced 15 percent commission rate — half of the App Store's standard commission. The savings mean small businesses and developers will have even more funds to invest in their businesses, expand their workforce, and develop new, innovative features for app users around the world. Stollenmayer is excited about the new wave of games that may come to the App Store from people who are new to game design. "I'm most interested in games from people that didn't make games before because they're super fascinating," he says. "You can publish something on the iPhone much, much easier than on any console without any obstacles. This is a super awesome opportunity for the indie studios that don't want to take any risks."

Speaking to iMore, indie iOS and Mac developer James Thomson said:

While long overdue, and likely influenced by the prospect of looming antitrust regulation, I still think this is a great move by Apple. It will make a significant difference to our small company - probably an increase of around 20% to our bottom line. That will really help us to keep producing great apps.

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