Google to reduce app developer fee to 15 per cent for first $1 million revenue

Google will reduce its service fee for Play Store, which it charges app developers, to 15 per cent for the first one million (USD) of revenue. The 15 per cent charge applies to all app developers who offer in-app products or subscriptions or goods and will be applied for each year. For instance, a gaming app, which offers items for in-app purchase, will have to pay 15 per cent revenue to Google for the first $1 million revenue it makes. For developers who make more than this amount, the service fee will be at 30 percent.

Google’s announcement comes after it faced considerable criticism in the Indian market, when it announced plans to charge developers 30 percent fee from the Play Store for any kinds of digital goods being sold within the app. It also wanted developers to implement the Play Store billing system to facilitate these in-app transactions.

When the decision was announced last year, Google had face criticism and anger from startups and app developers in the country. Paytm’s Vijay Shekhar Sharma had called it a ‘tax’ and cited need for developers in India to have their own app store.

Google had then decided to stall the decision to charge 30 percent fee to March 2022 from the earlier deadline of September 30, 2021. In a new blog post, Sameer Samat, Vice President, Android and Google Play wrote that, “We are announcing a significant change for those developers that sell in-app digital goods and services on Play (e.g. gems in a game).Starting on 1st July, 2021 we are reducing the service fee Google Play receives to 15% for the first $1M (USD) of revenue every developer
earns each year.”

The post adds that the change will impact 99% per cent of developers globally that sell digital goods and services with Play as they will see a 50 per cent reduction in fees.

“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 that uses the Play billing system, regardless of size,” adds the post.

Samat adds in his post that the company views this as a “fair approach that aligns with Google’s broader mission to help all developers succeed.” Further once developers can confirm basic information, this discount will automatically renew each year. The company will share more details on this in the coming months.

The post adds that the service fee for Google Play is only applicable to developers who offer in-app sale of digital goods and services, noting that more than 97% of apps globally do not sell digital goods, and therefore do not pay any service fee.

For Indian developers, which do sell digital goods, but have not yet integrated with Play’s billing system, the earlier deadline of March 31, 2022 will continue.

Google is following Apple with this trend. In November 2020, Apple had lowered the App Store fee to 15 per cent from 30 per cent for developers who generate much as $1 million in annual revenue from their apps and those who are new to the store. Apple has also faced similar criticisms from app developers for the high commission it charges from app developers for in-app subscriptions and goods.