According to data from Statista, Android has an 86.2% share of the smartphone market, compared to 13.8% for iOS. What’s interesting to note, however, is that Apple attracts more customers who are happy to pay a premium for their device and indeed the software they use: whilst $47.9 billion was spent on the Google Play Store in 2021, $85.1 billion was spent on the Apple App Store, despite its much smaller market penetration.
With consumers increasingly receptive to in-app purchases and premium content on their devices, the chances are that you’ll want to tap into the market and build an app that could generate additional revenue for your business. Before you do, it’s worth taking a look at the App Store Small Business Program and understanding how you could benefit from it.
In an effort to increase fairness and create a level playing field in the developer world, Apple announced in 2020 that it would drop its App Store commission percentage from 30% to 15% for small businesses earning under $1 million from the App Store each year. The news came at the same time as the company faced a number of antitrust lawsuits in the United States, with many companies and developers claiming Apple’s 30% cut was uncompetitive.
Google announced a similar program in 2021.
For developers and brands that surpass the $1 million threshold in a calendar year, Apple will apply the standard commission rate of 30% to all future sales in the App Store, including sales of new apps, subscriptions, and one-off in-app purchases. Apple says that if proceeds fall below $1 million in a future calendar year, they can apply for the reduced commission rate again. In order to take advantage of the program, developers must be Account Holders in the Apple Developer Program, review and accept the latest Paid Apps agreement and, if working with a developer, list all of their Associated Developer Accounts for transparency.
Whether you’ve already got an app on the Apple App Store or you’re building one, you’ll be able to take advantage of the App Store Small Business Program until you generate $1 million in revenue per year.
According to one 2020 study, the apps in the top 200 apps on the App Store earn around $82,500 each day but on average, apps in the top 800 earn around $3,000 per day, which is just over $1,000,000 per year.
If you want to maximise the benefits of the App Store Small Business Program, you should keep a close eye on your revenues from the App Store and consider offering some features and functionality away from the App Store, perhaps on a web app, to reduce your reliance on the platform and encourage consumers to pay using your preferred payment methods.
If you’re looking for help building an app for the Apple App Store or the Google Play Store, reach out to the award-winning software developers at Zudu. Give us a call on 01382 690 080 and be sure to check out some of our recent case studies for some app inspiration.
