6 ms·

Does the 15% have a shelf? Like... if a business makes $1,000,001, do they owe 30% on the entire amount, or just the extra dollar? In other words, is there a di

Does the 15% have a shelf? Like... if a business makes $1,000,001, do they owe 30% on the entire amount, or just the extra dollar? In other words, is there a disincentive to go above a million until you're above two million?

ghshephard 6y ago
I've asked that question of five or six Apple/IOS developers, some of them well known, and they've all just laughed at me. Worrying about coming close to $1mm/annual sales is something precisely zero of them were worried about. The answer to your question is, according to what I've read, yes - at $999,999 you owe $150K. At $1,000,001, you owe $300K. But - if you can get to $1mm, it's highly likely that $1.5mm, $2.0mm+, etc... are coming soon enough. Many developers are focussing on $50k, $60k, type scenarios, where the 30% to 15% means enough money in their pocket to afford new development hardware, etc...
- s3cur3 6y ago
  As I understand it, if you make $1 more than $1M, it's not that you suddenly owe an extra $150k in "back taxes," but rather that going forward, you'll be in the 30% "tax bracket." It's still a tax cliff, and therefore kind of problematic (if it's November 2021 and you've made $950k, you're strongly incentivized to shut down sales until the new year!), but as you say, that's a problem 99% of devs would love to have.
  - ummonk 6y ago
    How is it a tax cliff? My understanding is that after you hit 1 million they will start taking 30% of money that comes in after that for the rest of the year.
    - chongli 6y ago
      The issue is that if you cross the $1m threshold in the current year then the next January you don’t go back to 15%, you stay at 30% for the whole next year. So if next year your sales fall slightly below $1m, you end up paying $150k in extra Apple tax. Then the following year you go back to the 15% rate.
      - ummonk 6y ago
        Ah thanks, yeah that makes sense.
908B64B197 6y ago
That's one thing MS got right. If an App is found through external marketing they take a minimal fee. But if it's discovered through the store they take the full commission.
alextheparrot 6y ago
If I recall the news release correctly it is: a) If you currently make under 1$ million your rate will now be 15% b) If you to over 1 million you will be charged progressively, so each additional dollar you now only get 70% c) If you go over, the next year your starting rate will be 30% for every dollar
- ncw96 6y ago
  Yep, this is how the program works. One thing I would add is the $1 million threshold is based on your net proceeds after Apple’s cut, not your total sales. https://developer.apple.com/app-store/small-business-program/ https://developer.apple.com/app-store/small-business-program...
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dfabulich 6y ago
https://developer.apple.com/app-store/small-business-program/ https://developer.apple.com/app-store/small-business-program... > If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year. If you make $999K from January to June, your July revenues will be charged at 30%. That's pretty close to a progressive fee structure, but not quite exactly progressive. In no case will they claw back $150K from the money they already paid out.
jasamer 6y ago
Nitpick: you‘d have a disincentive in the, roughly, 1.000.001-1.220.000 range. Above that, you make more money anyway.
- 0xEFF 6y ago
  Isn’t it just like a progressive tax and there’s never a disincentive to make more money?
  - tunesmith 6y ago
    If you're right around a million every year, you have a huge incentive to not go over.
Lt_Riza_Hawkeye 6y ago
Just the extra dollar, the first year it happens. Starting next year you will be paying 30% on everything.
- john_alan 6y ago
  That’s insane. It should be like taxes. So you can make 1MM and keep 850k or make 1.001MM and keep 660.001k?
  - deleted 6y ago
    [deleted]
  - lifeisstillgood 6y ago
    Agreed - that's going to have some very weirded unintended consequences. It would be in someone's interest at 950k sales that year to basically stop selling. You would need to be sure you can make 150k of sales absolutely the next year or you actually lose money. I suppose it's a first class problem to have but it's odd why Apple would make (a small number of companies admittedly) have it all. I suspect it's a policy that will change after Tim Cook reads the viral blog post in 2022
  - quesera 6y ago
    That would be insane, but it is not accurate. Only the marginal fee goes to 30% -- there is no retroactive application to the first $1MM of income. The new rate applies to future income only. And unfortunately, triggering the rate increase is sticky. If you go over $1MM is 2021, the 30% rate will apply to all of your income in 2022. (If you are under $1MM in 2022, the rate will reset to 15% for 2023). This is the actual confusing part. Surely Apple could just apply the 15% rate to the first $1MM of every developer's income in each year instead. It's simpler, and it doesn't create the weird incentive to depress earnings at the end of the calendar year if they are approaching $1MM.
bengale 6y ago
Yeah it works like the sort of startup programs you can get from a lot of providers. If you’re income is under a threshold for that year your rate is discounted. It’s not a tax so doesn’t work in levels, if you no longer meet the requirements for the program then the next year you’re no longer on a discount.

ghshephard 6y ago

I've asked that question of five or six Apple/IOS developers, some of them well known, and they've all just laughed at me. Worrying about coming close to $1mm/annual sales is something precisely zero of them were worried about. The answer to your question is, according to what I've read, yes - at $999,999 you owe $150K. At $1,000,001, you owe $300K. But - if you can get to $1mm, it's highly likely that $1.5mm, $2.0mm+, etc... are coming soon enough. Many developers are focussing on $50k, $60k, type scenarios, where the 30% to 15% means enough money in their pocket to afford new development hardware, etc...

s3cur3 6y ago
As I understand it, if you make $1 more than $1M, it's not that you suddenly owe an extra $150k in "back taxes," but rather that going forward, you'll be in the 30% "tax bracket." It's still a tax cliff, and therefore kind of problematic (if it's November 2021 and you've made $950k, you're strongly incentivized to shut down sales until the new year!), but as you say, that's a problem 99% of devs would love to have.
- ummonk 6y ago
  How is it a tax cliff? My understanding is that after you hit 1 million they will start taking 30% of money that comes in after that for the rest of the year.
  - chongli 6y ago
    The issue is that if you cross the $1m threshold in the current year then the next January you don’t go back to 15%, you stay at 30% for the whole next year. So if next year your sales fall slightly below $1m, you end up paying $150k in extra Apple tax. Then the following year you go back to the 15% rate.
    - ummonk 6y ago
      Ah thanks, yeah that makes sense.

908B64B197 6y ago

That's one thing MS got right. If an App is found through external marketing they take a minimal fee. But if it's discovered through the store they take the full commission.

alextheparrot 6y ago

If I recall the news release correctly it is: a) If you currently make under 1$ million your rate will now be 15% b) If you to over 1 million you will be charged progressively, so each additional dollar you now only get 70% c) If you go over, the next year your starting rate will be 30% for every dollar

ncw96 6y ago
Yep, this is how the program works. One thing I would add is the $1 million threshold is based on your net proceeds after Apple’s cut, not your total sales. https://developer.apple.com/app-store/small-business-program/ https://developer.apple.com/app-store/small-business-program...

deleted 6y ago

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deleted 6y ago

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dfabulich 6y ago

https://developer.apple.com/app-store/small-business-program/ https://developer.apple.com/app-store/small-business-program... > If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year. If you make $999K from January to June, your July revenues will be charged at 30%. That's pretty close to a progressive fee structure, but not quite exactly progressive. In no case will they claw back $150K from the money they already paid out.

jasamer 6y ago

Nitpick: you‘d have a disincentive in the, roughly, 1.000.001-1.220.000 range. Above that, you make more money anyway.

0xEFF 6y ago
Isn’t it just like a progressive tax and there’s never a disincentive to make more money?
- tunesmith 6y ago
  If you're right around a million every year, you have a huge incentive to not go over.

Lt_Riza_Hawkeye 6y ago

Just the extra dollar, the first year it happens. Starting next year you will be paying 30% on everything.

john_alan 6y ago
That’s insane. It should be like taxes. So you can make 1MM and keep 850k or make 1.001MM and keep 660.001k?
- deleted 6y ago
  [deleted]
- lifeisstillgood 6y ago
  Agreed - that's going to have some very weirded unintended consequences. It would be in someone's interest at 950k sales that year to basically stop selling. You would need to be sure you can make 150k of sales absolutely the next year or you actually lose money. I suppose it's a first class problem to have but it's odd why Apple would make (a small number of companies admittedly) have it all. I suspect it's a policy that will change after Tim Cook reads the viral blog post in 2022
- quesera 6y ago
  That would be insane, but it is not accurate. Only the marginal fee goes to 30% -- there is no retroactive application to the first $1MM of income. The new rate applies to future income only. And unfortunately, triggering the rate increase is sticky. If you go over $1MM is 2021, the 30% rate will apply to all of your income in 2022. (If you are under $1MM in 2022, the rate will reset to 15% for 2023). This is the actual confusing part. Surely Apple could just apply the 15% rate to the first $1MM of every developer's income in each year instead. It's simpler, and it doesn't create the weird incentive to depress earnings at the end of the calendar year if they are approaching $1MM.

bengale 6y ago

Yeah it works like the sort of startup programs you can get from a lot of providers. If you’re income is under a threshold for that year your rate is discounted. It’s not a tax so doesn’t work in levels, if you no longer meet the requirements for the program then the next year you’re no longer on a discount.