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. 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 in nature, there are some key differences in the programs.
Under Apple’s App Store Small Business Program, if a developer passes $1 million, they automatically become ineligible to take part the following year. If their revenue for the following year falls below $1 million, 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.
The move by Apple, and similar move by Google is a welcome help to developers, especially startup developers, amidst the maturing App Store marketplace.