Apple’s key technology fees in the EU could bankrupt freemium app developers

App developers in the EU who comply with Apple’s new terms and conditions will pay €0.50.”Basic technology fee“Or a CTF of more than 1 million installs per app install, a model that would bankrupt free or free app developers.

Apple doesn’t charge a fee for each iOS account’s first million “annual installs” each year, but developers charge a fee after that. A free or freemium app that goes viral and has been downloaded more than a million times can command astronomical fees. As shown in the estimate Shared by developer Steve Troughton-Smith

Under Apple’s new terms, a free or freemium app that gets 2 million “initial installs” a year will have to pay an estimated $45,290 a month in fees. Apple Fee CalculatorOr more than half a million dollars a year, even if there is no money.

This is a sustainable model for free apps, and freemium apps need to earn at least €0.50 per user to break even on the fee. A free app with thousands of installs by non-paying users can end up owing more than it makes. Developers will likely need to charge an upfront fee to ensure their apps can earn enough money to pay the CTF, as offering an app for free download once the downloads exceed 1 million can be risky.

However, developers of free and free apps can choose to abide by Apple’s existing App Store terms instead of opting for new terms. In this case, nothing changes and app developers continue to pay Apple 15 to 30 percent commission.

The €0.50 CTF applies to apps distributed through the “App Store” and alternative app stores if developers opt in to the new terms. In the “App Store”, developers are charged 0.50 euros and Apple has to pay a commission of 10 to 17 percent. There are no commissions for alternative app stores. Fees can be estimated for existing and new terms through special calculators Available by Apple for developers.

Below is a breakdown of the available options:

• Current App Store Agreement Developers pay Apple between 15 and 30 percent commission. Sales of less than $1 million result in a 15 percent commission through the App Store Small Business Program, and sales of more than $1 million result in a 30 percent commission. Subscription requires 30 percent commission in the first year and 15 percent commission in the second year and thereafter
• New Terms, App Store Distribution Commission has been reduced from 30 percent to 17 percent and from 15 percent to 10 percent. There is an additional 3% fee for using Apple’s payment system, so a developer who chooses the new rules and uses in-app purchases will have a commission of between 13 and 20%. The 3 percent fee is not applicable to developers using alternative payment systems. Developers will pay €0.50 per app install per user after 1 million app installs per year.
• New terms on the App Store, alternative distribution – No commission, but developers will be paid €0.50 per app install, per user per year after 1 million app installs.

According to Apple, the CTF applies to the first annual install, which is the first time an app has been installed from an EU account within 12 months. After the first annual installation, the app can be installed as many times as you like without incurring any fees for 12 months on the same account.

Apple waives fees for non-profit organizations, accredited educational institutions, and government agencies that qualify for fee waivers.

Apple’s core technology fees can be outrageously high for an app like Spotify, which has millions of users. An app that earns $10 million through the “App Store” with 10 million “initial installs” (ie priced at $0.99) must pay Apple over $500,000 per month.

Changes to the EU app ecosystem are included in iOS 17.4, and developers who choose Apple’s new system will have to pay a fee starting in March, when the update is released to the public.