The App Store ‘Small Business Program’

Apple Developer:

We believe that small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. Launching January 1, 2021, the industry-leading new App Store Small Business Program is designed to accelerate innovation and help propel your small business forward. The program has a reduced commission rate of 15% on paid apps and in-app purchases, so you can invest more resources into your business and continue building the kind of quality apps your customers love.

The reduced rate applies to developers earning less than $1 million per calendar year.

This seems like an obvious and easy win for Apple and developers. According to Sensor Tower’s maybe-somewhat-accurate figures, almost all developers will benefit from this new fee structure yet it will have very little impact on App Store revenue. There are very few things I think of as a finally moment, but it is a mystery to me why it took this long.

Michael Tsai:

I wish it worked more like tax brackets, so that everyone paid 15% on the first $1M. That would help mid-sized developers.

This is the part that is perhaps most confusing. It seems simpler to have a marginal fee structure that resets every January 1. I imagine it would eat into Apple’s earnings more, since the small percentage of companies that generate the vast majority of App Store revenue would also enjoy a 15% rate for their first million dollars in sales every year, but it seems like a more straightforward and fair option overall.

Still, this is a positive change. There have been some fiascos this year — the Hey rejection just before WWDC and last week’s confusion over MacOS app certificates — but it really feels like Apple is firing on all cylinders. The seeds sown over the past decade seem to be bearing much fruit for users and developers alike. That is impressive in any year, and especially so in 2020.