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

luvbug said:
This is great, no doubt, but the dev fee has always reduced to 15% after the first year, although the media and competitors repeatedly ignored that fact. But yeah, for new apps this is super!
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They ignore it because it isn't in fact, a fact.

This might explain your confusion - https://developer.apple.com/app-store/subscriptions/#revenue-after-one-year - but it only applies to ongoing subscriptions. For some developers that's a chunk of their revenue. For apps that cost money and have no IAPs it's a fat nothing.

This program applies to all types of revenue.
 
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So that’s what they’re doing with the money saved by not providing chargers with the new iPhones haha.
 
nicho said:
@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...
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Great point! I stand corrected 🙂 Yup, a different cutoff for those (most, by far) who will start the year at 15%. The $1,176,470 is the number that’ll have meaning for most. Only if you start the year at 30% and are trying to duck back into the program will the 1,428,571 number be the one to stay under.
 
chris1958 said:
Unbelievable. Someone, who earns 999999$, is getting about 150000$ more than someone, who earns 1000001$ before Apple tax.
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That's why I like the US federal (and some states') progressive income tax. For example, income from $1-$999,999 would be taxed at 15%, and $1,000,000+ will be 30%. So for someone who makes $1,000,000, they'll pay 15% of $999,999 (so $149,999.85) + 30% of $1 ($0.30) so $150,000.15 total rather than $300,000. Still fair to both people.
 
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Abazigal said:
It’s comments like this that make me wish Apple wasn’t so quick to bow to public pressure sometimes. The whole “given em an inch and they want a yard” adage and all.

I continue to maintain that the iOS App Store holds a lot more value than simply being a payment processor. Apple has aggregated the best customers under one roof, which any developer can access simply by creating an app for the iOS platform. They have also put in the ground work into creating a trusted marketplace where customers are willing to spend more, which in turn serves to grow the whole pie and allow developers to earn more than if they had gone at it alone.

So if a developer made more than 1 million, he is no worse off than he previously was. If he made way less, good for him. He gets to bring home more money.

What I would like to see is if this results in lower app prices from the smaller app developers. One of the oft-parroted refrains is how Apple’s 30% cut results in higher prices for the consumer. Now that developers potentially get to keep more of their earnings, will they pass on some of this savings on to the customers, or choose to keep everything for themselves, thereby proving my point that app pricing has little to do with the 30% cut as it is largely demand-driven and has close to zero marginal costs?
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Thank you Apple! That is super reasonable. I might get back into Xcode development now.
 
Abazigal said:
It’s comments like this that make me wish Apple wasn’t so quick to bow to public pressure sometimes. The whole “given em an inch and they want a yard” adage and all.

I continue to maintain that the iOS App Store holds a lot more value than simply being a payment processor. Apple has aggregated the best customers under one roof, which any developer can access simply by creating an app for the iOS platform. They have also put in the ground work into creating a trusted marketplace where customers are willing to spend more, which in turn serves to grow the whole pie and allow developers to earn more than if they had gone at it alone.

So if a developer made more than 1 million, he is no worse off than he previously was. If he made way less, good for him. He gets to bring home more money.

What I would like to see is if this results in lower app prices from the smaller app developers. One of the oft-parroted refrains is how Apple’s 30% cut results in higher prices for the consumer. Now that developers potentially get to keep more of their earnings, will they pass on some of this savings on to the customers, or choose to keep everything for themselves, thereby proving my point that app pricing has little to do with the 30% cut as it is largely demand-driven and has close to zero marginal costs?
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Like every other developer, I am not going to charge less for my apps. I am going to charge the same amount on the AppStore and Steam. The price of a product is set by how much people are willing to pay for it. Even if EPIC lowered their cut even more, that is still a very expensive store to sell on.

Apple would have to have a 40% cut before I looked at EPIC and thought it was better value. The AppStore gives me way too much value, like dealing with sales tax and VAT world wide. If I had to deal with even just US sales tax myself that would warrant cutting off the US market even if the cut on the store was 5%.
 
winston1236 said:
So that’s what they’re doing with the money saved by not providing chargers with the new iPhones haha.
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In a way, actually, yes. Profit dollars are fungible. If they “save” money (decrease expenses or increase revenue) in one area they can “spend” it (decrease revenue or increase expenses) somewhere else, dollar for dollar, without affecting overall profits.
 
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VERY good move, Apple.

I knew these fights would not lead to Epic and co flat out winning against Apple, but I knew it could lead to lower margins somehow.
 
dz5b609 said:
They've thought off that, it's 1 million after Apple's standard 30 percent cut (even though you might have the 15% cut), to prevent situations like that.
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Not sure I see how that works.

Suppose you sell $1,428,570 of apps, which results in earnings of $999,999 after the 30% cut. Hence, you are subject to the 15% rate, so Apple sends you $1,214,284.

Then suppose you sell $1,428,572 of apps, which results in earnings of $1,000,001 after the 30% cut. You are therefore subject to the 30% rate, so Apple sends you $1,000,001.

In other words, selling one additional $2 app would cost you over $200k.

Am I missing something?
 
screensaver400 said:
Not sure I see how that works.

So you earn revenue of $1,428,570, which results in earnings of $999,999 after the 30% cut. Hence, you are subject to the 15% rate, so Apple sends you $1,214,284.

Then suppose you earn revenue $1,428,572, which results in earnings of $1,000,001 after the 30% cut. You are therefore subject to the 30% rate, so Apple sends you $1,000,001.

In other words, selling one additional $2 app would cost you over $200k.

Am I missing something?
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Yep the government works exactly the same way with respect to your tax bracket. Earn that one extra dollar and you owe more taxes.
 
Macropanda said:
This is great. I’m a dev that doesn’t earn even close to that limit so very nice indeed.
Imagine getting near the end of the year and sitting at 990k income. Surely it would be better to pull the app and lose a bit to get the next year at 15%?
Wouldn’t it make sense to make the first 1m 15% and 30% for everything earned over 1m?
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Yea, I was just thinking the same thing. This seems to create an odd incentive structure right at the 1m mark.
 
I wonder if devs who have lower prices for subscriptions (or in-app purchases) made through their websites will now lower their App Store prices.
 
Going to suck for devs that make right at or just over a million. A dev who makes $1,000,000 will actually end up making $150,000 less than another dev who makes $999,999. If devs making just over a million feel like they've run out of growth potential, they might be tempted to try to get rid of a few customers to drop their yearly sales under a million.
 
Rogifan said:
Yes this is my question. Is it 15% up to $1M annual sales and then 30% for anything over $1M? Or is it once a developer gets to $1M+ annual sales and stays there it’s 30% from the first dollar?
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"a developer who joins the program in 2021 and exceeds $1 million in earnings mid-year will need to pay out 30 percent commission going forward for the rest of the year" That seems pretty clear to me. "Going forward" is not "retroactive to the first dollar"

EDIT: left out a very important "not" in that last sentence. 🤦‍♂️
 
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screensaver400 said:
Not sure I see how that works.

Suppose you sell $1,428,570 of apps, which results in earnings of $999,999 after the 30% cut. Hence, you are subject to the 15% rate, so Apple sends you $1,214,284.

Then suppose you sell $1,428,572 of apps, which results in earnings of $1,000,001 after the 30% cut. You are therefore subject to the 30% rate, so Apple sends you $1,000,001.

In other words, selling one additional $2 app would cost you over $200k.

Am I missing something?
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See press release from Apple. If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year.

You are indeed missing something and your math is off, since the program is in no way retroactive. Earnings of $999,999 would mean being sent $999,999 and being eligible for the 15% fee the year after. Not the current year.

Earnings of $1,000,0001 would mean not being eligible in future years.
 
gnomeisland said:
"Going forward" is "retroactive to the first dollar"
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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.
 
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Nicole1980 said:
Yes they will. The FIRST million dollars they earn will ge taxed at 15%. So even a big dev like Epic will save $15,000 with this new system.
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They _would_ save $150,000 if they were still in the AppStore. As it is, they make nothing, and save nothing.
 
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