Apple cuts 30% commission to 15% for small developers
Apple will lower its commission to 15% if you make under one million US dollars per year. For small developers, this is fantastic news and overall it’s a good step in the right direction. In the bigger picture, more steps need to follow.
Apple will be lowering its sales commission to 15% for developers that make under one million US dollars per year. Apple states:
- 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.
As we have argued before, asking for 30% of your revenue in our industry is unreasonable. Making software, 30% is plus-minus the maximum you can expect in profits. At that margin, successful startups are kept small, and average performing startups will fail. 15% is still high, but one can run a business at that margin. Clearly, this is a step in the right direction and it’s fantastic to know that Apple still supports people that think different.
As great as this is for small developers, and as much as this is a first-class PR move… Apple’s concession doesn’t change the big picture. Small to medium-sized companies (at 1M revenue you are still small) are still held back to grow to bigger companies.
The second thought developers will have after “Wow! Cool! Finally!” will be: “Oh, and what if we cross the 1M threshold?” As great as it is to make $999,999.–, the moment when you cross that line, you’re back at ＄700,000.–. And from there it’s the old uphill struggle to grow.
There are other implications, as, for instance:
- Companies, like us, that are working on a brand new app, will think about founding another corporation to avoid the one million threshold and lose out on integrating the two apps together. User experience suffers as a result.
- Companies that get close to 1 Million in revenue before Christmas, will probably take their apps offline to not cross the threshold.
- Companies will be inclined to sell their Mac apps directly to raise the ceiling for their iOS apps.
There are many ifs and whats, but in the end, this is a really great first step in the right direction, Apple. Thank you. Now, let’s take the next.