Apple Drops App Store Fees to 15% for All Developers Making Under $1 Million From App Store

[Peperino]

I can see Epic making an argument that this actually favors their case:

1) developers wouldn't have had this discount had they not complained (which is what Epic is doing). There's no normal market means to cause prices to decrease because of lack of competition in app stores.

2) that Apple can easily discount by 50% shows how high Apple's profit margins are - an argument that Apple's fees are exorbitant.

3) that Apple is discriminating against large developers like them. In a normal functioning market, larger customers would receive lower prices, not higher ones.

In any case, lower fees do benefit a lot of people. It's just unfortunate that lower fees had to come by via such a process.

Totally, this Apple discount actually helped Epic's argument. In any business, wholesalers and large developers get more discount than the little guys. So Apple actually not only Apple is discriminating but this proves that their fees are ridiculously high.

 

[smulji]

Although it is a welcome change for small developers

It's a welcome change so long as your revenue is $1,000,000 or less. You can better there will be a developer (or two) who will try to find a loophole around it in order to not go above the 15% commission threshold.

 

[smulji]

In any business, wholesalers and large developers get more discount than the little guys.

This is a good point.

 

[bugFinder]

Let's be honest here, Apple is positioning this to fend off the various actions and criticism against them, doing it in a way that it will cost them less. But, having said that, it's a big deal for the smaller developer, so it's a win. But they are not doing it by choice, its a forced action.

Whatever does not have cash benefit for shareholders will definitely be forced action in a capitalism world

 

[Rogifan]

https://twitter.com/x/status/1329084838620459014

 

[psingh01]

Not sure what point you’re tying to make. Apple is still charging 30% (over one million) to help keep the App Store running; including those who are making billions.
Apple is just reducing their margins and making a good will jester towards indie devs.
Everyone’s original argument of needing 30% to keep the store running still applies.

No it doesn’t. They just proved it by not charging 30% to everyone. It also shows that they are afraid of regulation because of their anti-competitive practices so they are trying to head them off with these minor changes (and a few others they have recently made).

But my point was people siding with the fees before will now accept the changes just as you have. And when they drop the fees again you will again find a way to rationalize it as a good move where today you are still clinging to 30% as “needed” to run the app store.

 

[gaximus]

I actually agree. Having a fee change so rapidly could wreck havoc on your budget.

I thought the same thing, but it only change the percentage you currently pay for each transaction. So up to $1M you pay 15% then each transaction after that you pay 30%. It's not like Government tax, where you have to pay the percentage at the end of the year after they've seen how much you made.

 

[swingerofbirch]

This will force developers to act more like Apple to find loopholes.

If you're coming close in on $1 million, you're about to lose an additional $150,000 to Apple in addition to the $150,000 Apple is already taking.

Would they then pull the app for the rest of the year?

Set up a shell corporation (who does that sound like?) to have another "developer" submit the app(s) and funnel the money back?

This would make much more sense as a marginal tax (anything earned over $1 million pays 30%). Even that, I think, is stupid, but it would at least be more fair.

 

[kaycrystal626]

Great for indie developers. A great way to say screw you EPIC!

 

[Orson Farris]

I am a recent android refugee. Reading through the comments I can see how the fanboy force is strong with many here. Apple will do whats good for Apple. Period. A business is not your friend. You want a friend? Get a dog.

 

[NT1440]

I don’t get it. This is good news for indie developers and indifferent news for big development companies.

How is this bad?

 

[leman]

I thought the same thing, but it only change the percentage you currently pay for each transaction. So up to $1M you pay 15% then each transaction after that you pay 30%. It's not like Government tax, where you have to pay the percentage at the end of the year after they've seen how much you made.

Thanks for clearing this up!

 

[Rogifan]

Someone posted this on Ars Technica:

At first glance, looks like the rate is set based on a hybrid of previous year and current year of revenue.

Year 1 < $1M: then Year 2 rate = 15%

Year 2, at Q3 mark > $1M: then 30% kicks in and remains in place for Year 3

Year 3 < $1M: then Year 4 reverts back to 15%

I may be misreading, but sounds pretty complicated vs a system like graduated income tax.

Seems like a pretty complicated program in the service of ensuring companies like Epic don’t benefit and Apple’s services revenue doesn’t take much of a hit. 15% up to the first million in revenue and 30% on every dollar after seems much simpler.

 

[hans1972]

nice, but subscription is still 100 USD / year...??? why not 50 USD / year?

Apple has 28 million developers and they don't need more. The cost is there to keep the riff raff out.

 

[Scipster]

This is excellent news! Very well done. Glad to see Apple is finally joining the ranks of Sony, Microsoft, and Nintendo. Hopefully Google will follow suit!

 

[hans1972]

This is a bit out of touch. "Small business owners" are not those earning less than $1 million, it's those earning less than 100k.

I wish these fees were more gradual, and permanently, not just part of some "program".

Small business are often defined as having less than 50-100 employees or less than $5-10 million in revenues.
In the EU a micro business is defined as having less than 10 employees and less than €2 million ($2.35) in revenue.

Less than a 100k in yearly revenue would be a pico business.

 

[Maximara]

@Maximara and yourself are forgetting that those who qualify for this in the first year (or subsequent years) will only be paying 15% commission in 2021, so the math is different for them... post-commission earnings of $1m (or "proceeds" as apple call them in the press release) would come from $1,176,470. It's an extra $176k in the dev's pocket.

The $1,428,571 figure is still relevant in terms of deciding eligibility for the next year for devs who are not currently eligible, since their proceeds would be just under $1m.

That then raises the conundrum of the dev who sits at $1.3m sales every year and flip flops in and out of the program...

I don't think you understand how this works. Think of how income tax brackets work in the US - you have certain threshold over which you pay a higher tax. At the $1,428,570 cap the developer would be pocketing an extra $214,285.65 i the back.

Since the threshold is $1,428,570 there is not going to be and flip flops in and out of the program for the dev who sits at $1.3m sales because the threshold is $128,670 above their average baseline.

 

[Alex 88]

Epic Games can absolutely be credited with this 👍

 

[Seoras]

I never thought I'd be saying this but, THANK YOU EPIC!
I still hope you lose to Apple for being cretins and trying to crack open iOS.

 

[nitramluap]

I suggested something similar to Apple, but I would have gone a little further - like our progressive tax system in Australia:
- a threshold up to which you pay no fee (<$500 in earnings)*
- then brackets going up where the percentage increases, BUT
- you only pay the higher % for that amount in/above the threshold for the bracket.

So in their upcoming change with ‘two brackets’, would be 15% on everything up to $1M and then 30% on everything above $1m (while still paying $150,000 for the <$1M part).

It’s exactly the sort of progressive tax system that works well, but unfortunately so many Americans decry as evil socialism... 🙄

It’s fair, stops excessive wages, lifts those up at the bottom and helps pay for all the things we like in society (roads, public transport, etc) - same applies to this. As a small developer, I was still happy paying 30% and I’d be furious if companies like Epic paid *less* than 30%. This is definitely a step in the right direction.

* this might not work as it could result in the App Store being flooded with crap, or developers trying to game the system.

 

[gnomeisland]

Except it doesn't actually mean that...

Going forward - definition and meaning - Market Business News

It means from that point onwards. No retroactive application.

edit: you weren't actually addressing the question you quoted, either. It wasn't about the current year but the next one. To help with that... If a developer earns over $1m in a calendar year, the following year they will pay 30% on every dollar from the first dollar.

Doh. Typo. That should have read "is not" I invalidated my own point, sorry.

And, yes, if you make $1m one year and significantly less the next, Apple will take a bigger cut that next year. Given that most of the profits are made my a small percentage of apps that would be a really outlier scenario.

 

[gnomeisland]

I suggested something similar to Apple, but I would have gone a little further - like our progressive tax system in Australia:
- a threshold up to which you pay no fee (<$500 in earnings)
- then brackets going up where the percentage increases, BUT
- you only pay the higher % for that amount in/above the threshold for the bracket.

So in their upcoming change with ‘two brackets’, would be 15% on everything up to $1M and then 30% on everything above $1m (while still paying $150,000 for the <$1M part).

It’s exactly the sort of progressive tax system that works well, but unfortunately so many Americans decry as evil socialism... 🙄

It’s fair, stops excessive wages, lifts those up at the bottom and helps pay for all the things we like in society (roads, public transport, etc) - same applies to this. As a small developer, I was still happy paying 30% and I’d be furious if companies like Epic paid *less* than 30%. This is definitely a step in the right direction.

You have described exactly how it works the first year. The only difference (and I think you're right) is that the second year Apple will take 30% assuming that you will earn above the $1m threshold. My guess is they don't see many devs break the $1m threshold and drop back down quickly.

 

[smulji]

Someone posted this on Ars Technica:

At first glance, looks like the rate is set based on a hybrid of previous year and current year of revenue.

Seems like a pretty complicated program in the service of ensuring companies like Epic don’t benefit and Apple’s services revenue doesn’t take much of a hit. 15% up to the first million in revenue and 30% on every dollar after seems much simpler.

It is unnecessarily complicated

 

[Maximara]

Epic and Spotify not happy. They do have a point when Tim Cook says all developers are treated equally and that’s clearly not the case. This is probably also something that looks good but doesn’t touch the developers generating the majority of App Store revenue so won’t really impact Apple’s bottom line but will make for good PR.

Apple’s biggest App Store critics are not impressed with its new fee cut for small developers

Epic and Spotify are not pleased with Apple’s new App Store cut, saying it doesn’t solve core problems.

www.theverge.com

Epic and Spotify are learning the hard way that what is good for the goose is good for the gander. They did a PR spin on the non issue of 30% (a defacto industry standard) and Apple just lambasted them. Ok we'll help the "little guy" but the big players will have to pay their share - after all they are the ones with the money.

 

[MowgliWolf]

While the motivation is undoubtedly not altruistic given the amount of time they’ve been in hot water with this and the associated backlash, I can’t but tip my cap to them for this, it’s a nice touch for small devs