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Apple reduces commission for small developers

Yesterday Apple announced some great news for small businesses on the App Store: it is reducing its standard fee on App Store transactions from 30% to 15%.

Developers that make less than $1 million per year on the App Store will receive the new commission rate automatically starting next year. If a developer goes over the $1 million threshold within the year, they’ll be charged the standard 30% for the remainder of the year. There are details to come, but this seems very straight forward and fair.

This is an excellent strategy. It likely helps the vast majority of developers on the store, and encourages new apps to be developed that maybe couldn’t have been earlier. A 30% commission is a very high fee to pay for a small business selling software. 15% is significantly better. It’s still very high compared to normal payment processing vendors at around 3%, but this is still a big deal. (Especially since the other app stores will likely follow along soon.)

The incentives are well aligned here for Apple and developers. This encourages new apps and new developers which should have a positive impact on the number of great apps on the store for users. Apple likely is giving up very little in the long run here, because App Store revenue is very clearly tied to the big players.

This is a great first step in the direction of a better App Store economy for developers. Great move here, Apple.