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The App Store Small Business Program Will Benefit 98% of App Developers

Technology

Tammy Slaughter wrote this article

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It’s been a year of pretty monumental challenges and changes, but one thing that’s remained steady has been Apple’s regular updates on everything from iPhone 12, to the latest iOS14.

And it would seem the updates won’t stop here, as Apple has now unveiled its new Small Business Program.

Starting January 1st, 2021, any app developers making under $1 million in annual app proceeds can qualify for a reduced commission paid out to the App Store.

 

The program reduces the App Store fee from 30% to 15% for developers who fit this criteria.

This is a big deal for small businesses looking to power their businesses into the next decade.

More details are coming before the year is over, but we’ve summed up what we know so far about this new program below!

Smaller Fee — Big Impact on Small Business

According to AppFigures, Apple’s new program will benefit 98% of app developers.

“Using Explorer, we can see that of the 2 million apps available in the App Store right now, 376K are either a paid download, have in-app purchases, or monetize with subscriptions. Those apps belong to 124.5K developers. Of those developers, only a little under 2% earned more than $1,000,000 in 2019. Surprised? 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.”

Overall, this is quite positive, as it means that most app developers, startups and companies will benefit greatly from the decrease in fees generated from iOS in-app purchases.

However, developers making just under 1.5M do account for roughly 39% of all developers in this group that don’t qualify for the new program.

At the same time, the smallest portion of those who don’t qualify — developers making more than $150M (just 1.5% of the $1M+ club) — are ultimately responsible for more than 29% of revenue for the group.

This is likely to ruffle some feathers for those mid-level developers who are uncomfortably close to the cut-off, and for which a 15% decrease would make a big difference to their overall company bottom line.

Growing Dissent in the App Community Over Apple’s Policies

Indeed, makers like Epic and Spotify are speaking out against the new Small Business Program.

Epic Games CEO Tim Sweeney told CNBC:

“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally.”

Alternative app stores are on the rise, but it is highly unlikely they’ll have any sway over a battle waged on Apple’s own frontier; and help lead to fees driven by real completion.

They are the pioneers, after all.

There’ve been stirrings of dissent against Apple within the app community for some time now, with several ongoing antitrust cases in the U.K. and public battles with a number of developers.

A Win-Win for Apple and Small Business

In one fell swoop, Apple has likely mitigated antitrust allegations and made most app developers quite happy — in the process, only relinquishing 5% of their revenue based on 2019 earnings from the group who’ll be discounted moving forward.

At the same time, it’s important to know that businesses/ developers will need to apply for the fee decrease if they fit the criteria (>1M in proceeds after the fee is assessed), so keep your eyes peeled as this latest update is unveiled starting 2021.

While the juries still out on the motivations behind Apple’s latest move, we’re absolutely thrilled about it here at Chop Dawg.

Ultimately, this will positively impact our partners past, present, and future; empowering more aspiring entrepreneurs and existing companies alike to leap into the app space.

About ChopDawg.com: Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.

 

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