Apple reduces its App Store cut to 15% for most developers

Apple reduces its App Store cut to 15% for most developers

Apple reduces its App Store cut to 15% for most developers

Today, Apple has announced that they will be reducing their earnings cut from Apple Store transactions from 30% to 15% in 2021 for most developers, calling this move the “App Store Small Business Program”. With this move, Apple plans to attract more developers to its platforms and better support its app store’s existing developer community.  

App makers who earn less than $1 million per year through the App Store will be eligible for this reduced rate. When developers on Apple’s lower rate earn more than $1 million, they will start paying Apple’s full 30% cut of App Store revenue. That said, those who earn more than $1 million during 2020 will be forced to pay Apple’s full 30% cut for the full 2021 year.

In recent months, Apple has been un hot water for taking such a large revenue cut from apps on their storefront, which can often allow Apple to generate larger profits on products than app developers. This change from Apple will allow the company to claim that they have alleviated these concerns, while still taking a full 30% revenue slice from their top earners. 

With this move, Apple wants to show regulators that they are reacting to their concerns. That said, this process is a clear attempt to appease regulators while protecting their largest revenue streams. This is the opposite approach to Valve’s strategy for revenue sharing, which sees developers gain a larger revenue share once they have generated a specific amount of revenue on Steam. For example, Steam takes a 30% revenue cut until sales total $10 million, a 25% cust from $10-50 million, and a 20% cut beyond $50 million. 

Apple’s approach is a clear attempt to silence wider criticisms appeasing smaller app developers. That said, companies like Epic Games, the creators of Fortnite, will not benefit from this move in any way, as they earn over $1 million per year through their apps.       

Apple reduces its App Store cut to 15% for most developers 
While this move from Apple is a generous one, it is also a move that is designed to downplay wider criticisms with positive headlines. The question remains, if Apple can profit by taking a 15% revenue cut from small developers, why can’t they do the same for the larger developers who earn more revenue for the company?  

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