Apple Reduces App Store Fees to 15% for Small Businesses
In a significant policy shift, Apple has announced reduced App Store commissions for small developers earning under $1 million annually. The new App Store Small Business Program cuts fees from 30% to 15%, offering substantial savings for qualifying businesses.
Key Details of the Small Business Program
- Launch Date: January 1, 2021
- Eligibility: Developers with ≤$1M in annual revenue (post-commission)
- Gross revenue threshold effectively ≈$1.3M
- Applies to both existing and new developers
- Annual Review: Developers can requalify each year based on prior year earnings
- Revenue Exceedance: Developers surpassing $1M will transition to standard rates (typically 30%) for remainder of year
What Stays the Same
- Subscription businesses maintain existing 15% rate after first year
- Full access to Apple developer tools remains unchanged:
- Xcode development environment
- Swift programming language
- 250,000+ APIs
- Advanced frameworks (ARKit, CoreML, HealthKit)
Market Context and Impact
Apple’s App Store ecosystem:
- 1.8M+ apps available
- 1.5B+ devices across 175 countries
- $519B in 2019 commerce (85% to third-party developers)
While Apple hasn’t specified exact numbers, they estimate the “vast majority” of developers will qualify for reduced fees. Additional eligibility details will be released in December.
Strategic Implications
This move comes amid:
- Regulatory Pressure: Ongoing antitrust scrutiny worldwide
- Developer Relations: High-profile disputes with:
- Epic Games (Fortnite ban)
- Basecamp (Hey app rejection)
- WordPress (payment restrictions)
- Economic Challenges: Pandemic-related strain on small businesses
Apple’s Services segment (including App Store) reached $14.5B revenue in Q4 2020. The fee reduction may impact this growing business unit, though Apple has diversified with offerings like Apple One bundles.
Leadership Perspective
“Small businesses are the backbone of our global economy and the beating heart of innovation,” said Apple CEO Tim Cook. “This program helps developers fund their businesses, take risks on new ideas, and continue making apps that enrich lives.”
This policy change represents Apple’s most direct response yet to growing developer concerns about App Store economics, potentially reshaping the mobile app landscape for small businesses worldwide.
