Apple announces a reduction in its App Store commission rate for smaller businesses. It is an industry-leading new developer program to accelerate innovation. Additionally, it is to help small businesses and independent developers propel their businesses forward.
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Under the new guidelines of the “App Store Small Business Program,” developers earning up to $1 million per year will only have to pay a 15% commission. Moreover, it is half of Apple’s standard 30 percent fee, on all paid app revenue and in-app purchases.
What will the App Store Small Business Program entail?
The App Store, which generated an estimated $50 billion in revenue in 2019, according to CNBC. It is one of Apple’s most pivotal businesses beyond the iPhone.
The company says the “vast majority” of iOS app developers will be able to access the program. However, they have not mentioned any numbers clearly. On the other hand, Apple has not specified how much of its App Store revenue would be affected.
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Apple says it will benefit the vast majority of developers who sell digital goods and services on the store. In addition, this program will provide them with a reduced commission on paid apps and in-app purchases. The new program for the app store will launch on Jan. 1, 2021, and will be based on the business’s revenues in 2020. Subsequently, it will be based on how many existing developers made across all their applications on a post-commission basis. It means the businesses could actually earn up to $1.3 million in gross revenues. The reduced fee will also apply to new developers launching their apps for the first time.
If the developer’s apps surpass the $1 million thresholds, they will be moved to the standard commission rate. In the end, the App store commission will be 30%, for the remainder of the year. On the other hand, if it is the opposite, they can re-qualify for the program and its reduced commission rate.
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“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.”
Apple’s CEO Tim Cook said in a statement
Apple today has 1.8 million apps on its App Store, which reaches over 1.5 billion Apple devices across 175 countries worldwide. Right now, Apple’s demands for a 30% cut — which the company recently argued is comparable to other marketplaces of this nature
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Sushmita Choubey
Marketer to the core, a writer from the soul. Engineer and an MBA turned budding tech writer - dabbling her hands in all genres of writing from tech to fiction. If not writing, you will always find me reading anything and everything. Otherwise, you will find me learning new languages.