Apple's App Store commission cut applies to about 98% of developers

Posted:
in General Discussion edited November 2020
Apple's new App Store program that cuts in-app purchase commission rates to 15% will apply to the overwhelming majority of all iPhone, iPad, and Mac app developers, data shows.

Credit: Apple
Credit: Apple


The App Store Small Business Program slashes Apple's cut of in-app transactions to 15% for developers paid less than $1 million by Apple in 2019. That rate is also post-commission, meaning it's after Apple takes its cut.

According to app data and analysis company AppFigures, that threshold means that the program applies to more than 98% of the developers making money on the App Store.

Diving in the numbers, the site notes that out of the two million apps currently on Apple's marketplace, about 376,000 are a paid download, monetize with subscriptions, or have some form of in-app purchases.

Those 376,000 apps belong to about 124,500 developers. Of those, a little under 2% actually made more than $1,000,000 in 2019, according to AppFigures' app intelligence platforms.

"That means that roughly 98% of all developers that can make money in the App Store as of right now will qualify for the program, which opens in 2021 and keep more revenue in their pocket instantly," AppFigures' Ariel Michaeli wrote.

Of the developers that do surpass the threshold, most of them are names you'd expect. They include Google, Tinder, Bumble, Disney, Dropbox, LinkedIn, and a slew of game companies. In fact, game developers made up more than half of the "$1 million club."

About 39% of the developers that don't qualify for the program make less than $1.5 million. Developers that make more than $150 million make up just 1.5% of the businesses that don't qualify but are responsible for 29% of the total group's revenue. The next group, those that make between $50 million and $150 million, accounts for 24% of the group revenue.

In other words, as some financial analysts have pointed out, the program applies to the vast majority of developers. Still, it is likely to have an immaterial effect on revenue because a relatively small portion of companies contribute to total App Store earnings.

"This move is truly a win-win for Apple. In a single swing, Apple managed to make almost every developer in the ecosystem happy, potentially fend off a set of anti-trust lawsuits, and give developers more incentive to stay with Apple," Michaeli wrote.

The App Store Small Business program that cuts the commission begins in January 2021 and has already received a warm reception from many developers. Apple says that more information about the program will be released in December.

Comments

  • Reply 1 of 9
    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.
    williamlondonnarwhalwatto_cobra
  • Reply 2 of 9
    Rayz2016Rayz2016 Posts: 6,957member
    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.
    And at the same time, they’ve shown the middle finger to the multimillion dollar developers who’re whining like they’re starving startups. 


    edited November 2020 williamlondonnarwhalwatto_cobralkrupp
  • Reply 3 of 9
    BeatsBeats Posts: 3,073member
    Wow what will "greedy Apple" do next!!!

    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.

    How is this a "win" for Apple? Apple literally gives up profit.

    I think Apple should give the finger to knockoff platforms and only allow these conditions to exclusive developers. Of course idiots will say this is "anti-competitive" even though the knockoffs sell literal knockoffs of Apple products.
    watto_cobra
  • Reply 4 of 9
    BeatsBeats Posts: 3,073member
    Rayz2016 said:
    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.
    And at the same time, they’ve shown the middle finger to the multimillion dollar developers who’re whining like they’re starving startups. 


    Tim Sweeney said his campaign was for "the little guy". Now that the "little guy" is making more profit what excuse will he push now?

    Fun fact:
    Tim Sweeney CEO of Epic is richer than Tim Cook.
    watto_cobra
  • Reply 5 of 9
    avon b7avon b7 Posts: 7,590member
    Beats said:
    Wow what will "greedy Apple" do next!!!

    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.

    How is this a "win" for Apple? Apple literally gives up profit.

    I think Apple should give the finger to knockoff platforms and only allow these conditions to exclusive developers. Of course idiots will say this is "anti-competitive" even though the knockoffs sell literal knockoffs of Apple products.
    You seem to have forgotten he said 'win' for Apple AND small developers.

    Giving up profit isn't always a loss, is it? 

    It can actually be turned into more profit down the road. 
    Pascalxx
  • Reply 6 of 9
    crowleycrowley Posts: 10,453member
    I understood that the 15% rate applies to the first $1m a developer makes on the App Store each year. In which case doesn’t it apply to 100% of developers?  It’s just capped at a possible $150k saving, which means a lot more to small developers than really big ones.
    Pascalxx
  • Reply 7 of 9
    There is absolutely no way a third party can divine these figures. This is a fantasy projection.
  • Reply 8 of 9
    Beats said:
    Wow what will "greedy Apple" do next!!!

    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.

    How is this a "win" for Apple? Apple literally gives up profit.

    Did you not read the next sentence in the article?  It explains it very well.
  • Reply 9 of 9
    This is great! My understanding is that the remaining 2% make up over 95% of Apple's app profit, so it's a win-win for Apple and small developers.
    This should be a model for the new US economy!  The top 2% should make up 95% of the taxes (profit) and the bottom 98% taxes are cut in half (up to the 1st $1M)!  I like it!
    Pascalxxkiltedgreen
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