Malcolm Owen
Google is following Apple's lead in cutting app store commission by introducing a 15% commission fee schedule for Google Play transactions that is similar to the App Store Small Business Program.
The standard 30% commission paid for purchases in the Google Play Store will be reduced down to 15%, Google announced on Tuesday. The change, which will commence on July 1, will apply to the first $1 million in revenue generated using the Play store's payment mechanism each year.
After the developer passes the $1 million in revenue milestone for the year, the fee will return to its usual 30% level, TechCrunch reports. Once the year is up, the fee will again reduce down to 15%, until the developer again passes $1 million in app sales and in-app purchases.
The move echoes a practically identical initiative from Apple, which it announced in November for commencement on January 1. While seemingly similar, there are some differences in the programs.
Under Apple's App Store Small Business Program, if a developer passes $1 million, but they become ineligible to take part the following year. If their revenue then falls below $1 million for that following year, they can reapply for the discounted rate the year after that.
Google's version operates on the first $1 million in revenue per year, and will automatically restart the following year, regardless of the revenue level of the previous year.
"With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees," writes VP of Product Management Sameer Samat. "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."
The decision to make the fee reduction applicable to all developers regardless of size is said to be due to a continued need to pay for scaling. "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," states Samat.
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9 Comments
Right, all we ever heart about on tech forums is Apple’s ‘extortionist’ fees for the App Store. Evil Apple!!! And who, exactly, decided that 30% was too much? The freetard crowd? That’s what we get here from that crowd. 30% is TOO much. Why, exactly is it too much when Apple pays out $billions to developers every year?
It’s sad that the copycat has a photocopy of Apple’s inventions and is profiting off them.
I’ve said it for years, Apple should only provide a fee cut for exclusive apps. Developers who copy paste apps to the knockoff platform can cry elsewhere.
Imagine if Wal-Mart invented the store and turned you from a man living in mom’s basement to a multi-millionaire BY HELPING YOU OUT and you complain that they don’t pay you enough?
There has been a lot in the industry press lately about the 30% that Apple, Google, Microsoft and many many others charge to sell software and services through their electronic stores. While the past is not always the best way to view things, developers used to pay 70-80% or more to move their software from their premises to the end customer. The chain was: customer buys from retailer (40% margin) buys from wholesaler (30% margin) buys from jobber (10% margin) buys from developer. The electronic stores cut out all the middle men but notice that they did not try to keep the whole historical fee for themselves.
I am sure EPIC, Spotify and others want to pay nothing but that is NOT reasonable. I also doubt very much that EPIC or Spotify want to create their own store, and I doubt that they could do so for that same 30% fee because there are many many developers who are jointly sharing the cost of marketing their products. We should be talking about what is reasonable rather than what we "want", because there is no mechanism other than supply and demand to reconcile the "cost of service" supplier approach and the "what is it worth" market approach.
Until Apple's recent drop in from 30% to 15% for small businesses, those who have the electronic stores have displayed a uniform front in charging 30%. Viewed historically 30% is a whole lot better than the 70-80% that it used to be. Could it be less? Possibly. It is likely that the companies needed 30% in the early stages of setting up electronic stores since setting something up is always more expensive than running it on a ongoing basis. Could the stores take a smaller cut now that the stores are operating routinely? Possibly. Notice what Apple did in reducing their standard fee from 30% to 15% for smaller developers who constitute most of their developers. Now they have been followed by Google who have also dropped their fee to 15% on the first million in sales. It is interesting that Google will charge 15% on the first million and reset the fee back to 15% for the start of the following year whereas Apple fee is not automatically reset and developer sales has to drop back below the million dollar cut off and the developer has to reapply for the fee to be reduced back to 15%. At this point it looks like Google offers the better financial package to developers.
It will be interesting to see where all of this leads.
30% commissions is high, but reducing it to 15% to incentivize/help small developers is a huge step forward.
2 thumbs up,