Apple Inc on Wednesday said it plans to start a program to lower its App Store commission for software developers who make $1 million or less in proceeds each year from the store.

Apple takes a 30% cut of most purchases made on the App Store, although the commission drops to 15% for subscriptions that remain active for more than a year.

Furthermore, Apple said on Wednesday that developers will automatically get the lower 15% rate if they generate $1 million or less in proceeds, defined as the portion of App Store purchases that the developer keeps – in a calendar year.

Apple’s App Store fees and rules have come under fire from both large software firms such as Microsoft Corp, Spotify Technology SA and Match Group Inc as well as numerous startups and smaller companies that allege the fees deprive consumers of choices and push up the price of apps.

Apple has responded by saying its rules apply evenly to developers and that the App Store provides an easy way to reach its huge base of users without having to set up payment systems in the 175 countries where it operates.

The company said the new program will start on Jan. 1, 2021.

Software developers who netted less than $1 million from the App Store this year will qualify for the 15% rate next year. If the developer’s proceeds rise above the $1 million thresholds the next year, Apple’s standard rates kick in for the rest of that year. If the developer’s proceeds fall below $1 million in a given year, they become eligible for the lower rate the next year.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” Chief Executive Tim Cook said in a statement.

Apple said it will give more details on which developers qualify next month. Source- Reuter

Apple App commission

Apple App Store

Apple’s App Store ecosystem facilitates interactions between app developers and nearly one billion Apple device owners globally. To promote its success, Apple provides developers with distribution, search, and review services, as well as a set of tools to build and monetize apps.

Apple also invests in the safety of the App Store and in developing new technologies and functionalities. While Apple charges developers an annual fee to enroll in its Developer Program and upload apps to the App Store, Apple does not charge developers to offer each individual app on the App Store, to distribute updates to users, or to access Apple’s app analytics, marketing, and developer tools. Apple receives commissions from developers when users download paid apps and make in-app purchases of digital content, services, and subscriptions.

Developers earn 70% of sales from paid apps and in-app purchases, and Apple collects a 30% commission. For in-app
subscriptions. Apple charges a 30% commission for the first year. After that, Apple’s commission falls to 15%, meaning that developers’ earnings increase to 85%.

However, Apple is now planning to also reduce its commissions for software developers who make $1 million or less in proceeds each year from the store starting January 1 2021. This is a good news and something to look forward to in the coming year.

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