“Support Small Businesses” – Apple Cuts App Store’s Commission Rate To 15%

A significant modification has been set forth by Apple lately, under which App Store commission rate drops to 15 per cent. The recently developed initiative, known as the App Store Small Business Program, provides access to developers who make profits up to $1 million in a fiscal year.

The new developers as well as the existing developers who earn up to $1 million will have availability to this program as mentioned by Apple. This program is for those companies who earn less than $1 million annually all over the apps on Apple’s App Store, after Apple’s fees.

To give an instance, only 15 per cent commission is paid by developers making less than $1 million. The standard commission rate, that is, 30 per cent, will apply to any engaging company exceeding the $1 million thresholds, for the remainder of the year.

Apple also states the procedure of requalification for the 15 per cent commission rate for the next calendar year in the case of a developer facing downfall in the business which is below the given threshold.

The commencement year’s commission rate of subscription to the companies attaining the eligibility is 15% for the program. The said commission rate remains the same for all following years.

The subscription plans also have certain implications. An in-app subscription by Apple is charged a 30% commission on the first year as we speak. In the case of the users deciding to carry on with the subscription, past that period, then there is a reduction in the commission of 15%.

Tim Cook, CEO of Apple, focuses on the importance of supporting small businesses and states:

“Small businesses are 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.”

Additionally, he also 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.”

An announcement was made by Apple at the beginning of the year, declaring the commission rate for applications proposing paid online events were being waived by the year-end caused by the COVID-19 pandemic. The waiver will continue into 2021 or not, is not known for sure yet.

A remarkable change to the App Store commission rate is the latest announcement. The rapid growth in the antitrust examination over the App Store business model experienced by Apple is the reason for this change. Until this, 30% cut of App Store purchases and in-app purchases, was firmly set by Apple, now descending to 15% during the second year, in case of the subscription’s recurrence.

The Newsroom website can be referred to read Apple’s detailed announcement. Some more thorough information will be shared of the App Store Small Business Program, at the beginning of December by the company. The program is set to be launched on January 1, 2021.