What Google and Apple's Commission Reduction Means for You

Apple’s late 2020 pledge to better support small business and startups gaining momentum on the App Store are now being put to the test with Google announcing a similar course of action this week. But how do the two programmes compare for owners?

Published by Hamish Kerry

With the next wave of innovative technology on the App Store, the new App Store Small Business Program is built to drive innovation and help move the small business forward. It has a 15% commission rate on paid apps and in-app purchases (down by half from Apple’s standard 30%), allowing business owners to put more money into their companies and continue to create high-quality apps and digital services that consumers love.

Since December’s announcement, Google has been under increasing pressure to make similar reductions to their commission rates for small businesses. AS of July 1st 2021, it is reducing the service fee for Google Play to 15% — down again from 30% — for the first $1 million USD of revenue, developers earn using the Play billing system each year. Google claims its programme is open to 99% of Developers currently listing applications on the Play Store. So how do the two schemes work, and how do they compare when it comes to keeping the pennies in the pocket of the app owner?

The App Store Small Business Programme

  • Existing developers who made up to 1 million USD* in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.

  • If a participating developer surpasses the 1 million USD* threshold, the standard commission rate will apply to future sales.

  • If a developer’s proceeds fall below the 1 million USD* threshold in a future calendar year, they can re-qualify for the 15% commission the year after.

  • Developers must identify any Associated Developer Accounts to determine proceeds eligibility.

*£722,465.00 as of March 2021

Credit: Brett Jordan on Unsplash

What is an Associated Developer Account?

An Apple Developer Program accounts that you own or manage, or an Apple Developer Program account that owns or controls your account is referred to as an Associated Developer Account. When you sign up for this programme, you need to list all of your Associated Developer Accounts to ensure that all of them are fully eligible, and accounted for under the single small business programme account. If you’ve developed your application with Arch, we’ll be able to direct you to how best you can take advantage of the App Store Small Business Program.

Proceeds eligibility

You and your Corresponding Developer Accounts must have generated no more than 1 million USD in gross proceeds (sales net of Apple's commission and certain taxes and adjustments) during the 12 fiscal months preceding the 2020 calendar year, and no more than 1 million USD in the current year to be eligible for the program.

App transfers

If you completed an app transfer (for an eligible app) following December 2020 you won’t be able to join the programme.

How can you enrol?

The vast majority of App Store developers who offer digital products and services are eligible, there are a few simple steps to get underway.

To enrol, you'll need to do the following:

  • Be an Account Holder in the Apple Developer Program,

  • Review and accept the latest Paid Apps agreement (Schedule 2 to the Apple Developer Program License Agreement) posted December 2020 in App Store Connect, and

  • If applicable, list all of your Associated Developer Accounts.

You can enrol in the programme directly through this link: Enrol here

How will Google’s Programme Compare?

Specific details of the programme are yet to be confirmed, however, we can expect that by and large the tech giant will be keeping in the tradition of close competition with Apple. In fact, the limited details we have on the programme and its stilly fuzzy details come from a blog shared by Google’s VP of Product Management, Sameer Samat.

“Starting on July 1, 2021 we are reducing the service fee Google Play receives when a developer sells digital goods or services to 15% for the first $1M (USD) of revenue every developer earns each year. With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees. These are funds that can help developers scale up at a critical phase of their growth by hiring more engineers, adding to their marketing staff, increasing server capacity, and more.

While these investments are most critical when developers are in the earlier stages of growth, scaling an app doesn’t stop once a partner has reached $1M in revenue — we’ve heard from our partners making $2M, $5M and even $10M a year that their services are still on a path to self-sustaining orbit. This is why we are making this reduced fee on the first $1M of total revenue earned each year available to every Play developer, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed. We look forward to sharing full details in the coming months.”

What next?

If your application is live on the Apple App Store and generated under $1million USD in 2020 you can apply to their Small Business Programme now. Reports from participants are hopeful, pointing to ease of application and experience.

For Google’s programme, well we’re just going to have to wait and see. It’s suggested we can expect some exciting updates over the coming months, until then we’ll have to wait for more concrete information on the nuances of the programme.

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