Apple to halve App Store commission for small businesses

The new 15% cut is a considerable reduction from Apple’s long-standing 30% fee

Apple App Store logo on an iPhone display

Apple has announced that it will reduce its App Store commission to 15% for small businesses earning up to $1 million (£750,000) in revenue per year. 

The move to lower its cut comes as part of a new developer programme which aims to enable small businesses and independent developers to grow their businesses with the help of apps on the App Store.

The 15% commission, which will come into effect on 1 January 2021, is a considerable reduction from Apple’s long-standing 30% fee on all paid app revenue and in-app purchases regardless of proceeds, which has been the subject of numerous controversies and legal disputes.

Apple stated that it would provide further details on the App Store Small Business Program in early December. However, according to the essential rules released today, new and existing developers are allowed to partake in the programme under the condition that they had not earned more than $1 million in 2020 for all of their apps.

However, if a participating developer surpasses the $1 million threshold, they will have to pay the standard commission rate of 30% for the remainder of the year. Developers whose earnings are below the $1 million threshold in a future calendar year will be able to re-qualify for the reduced commission fee the following year. 

Commenting on the announcement, Apple CEO Tim Cook described small businesses as “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,” he said. 

“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.”

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