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The first paragraph of the article is much clearer, and seems to agree with your interpretation: “The Amazon Appstore has announced that it will be reducing it

The first paragraph of the article is much clearer, and seems to agree with your interpretation: “The Amazon Appstore has announced that it will be reducing its cut of developer revenue from 30% to 20% for developers that earn less than $1 million in revenue per year. The new terms, which Amazon is calling the Amazon Appstore Small Business Accelerator Program, will also provide developers with AWS promotional credit in an amount equivalent to 10 percent of the developer’s revenue if they earn less than $1 million in revenue per year. If a developer chooses to use those AWS credits, that brings their total Amazon Appstore revenue share up from 70% to an equivalent of 90%.”

elliekelly 5y ago
I think maybe I was (am?) reading too much into it because when I initially read that paragraph it just left me more confused! I guess I don’t really understand how the accounting of it works because they called it a “revenue share” which made me think one sale would result in: $80 in developer revenue $20 in Amazon revenue But it also said the AWS credits will be based off of the developer’s revenue and judging by the “equivalent of 90%” it would seem that Amazon sees the transaction as more like: $100 in developer revenue ($20) in developer expenses to list on the app store resulting in $20 in Amazon revenue But I wouldn’t consider that revenue sharing?
biztos 5y ago
From the quoted paragraph I get: You sell for $100. Amazon was taking $30. Now Amazon takes $20 and gives you a "promotional credit" of 10% of the $80, or $8. So if you use all of the "promotional credit" then you make $88 which is not quite the equivalent of 90% but pretty close. Assuming "promotional credit" means just regular credit you can use for anything on AWS, I wonder how much of this credit either gets left on the table (don't need AWS, credit expires) or stimulates further spending for Amazon (let's use AWS, it's "free"). It might be interesting to have that extra 8% not booked as revenue, but IANAn Accountant.
- handrous 5y ago
  What are the tax implications of this? Is that $8 income?
  - ezekg 5y ago
    Why would a credit be taxable? Regardless, you don't pay taxes on expenses anyways. IANAL.
    - ajsnigrutin 5y ago
      You've received something with a monetary value, so it's (maybe?) counted as revenue. If it's taxed, and you don't actually use it, you'll be paying tax on something that you don't need.
      - tedk-42 5y ago
        Not quite revenue, if you're already hosting your app on AWS and paying AWS for that, those expenses decrease. But in no way are AWS giving away money so to speak. They are trading their commission from your app for compute they can offer
        ajsnigrutin 5y ago
        I think a tax lawyer would have to answer this, and that it probably depends on the country. In my country, I (even if "I" means a company) can receive a business gift with a maximum value of 42eur, twice per tax year from one company - everything above that is taxed. Let's say i did some work for a local store and charged them 2000eur for my work. To do my work, I had 1000eur of expenses. I pay tax on 1000eur difference. With eg. 20% income tax, I'd have 800eur of profit. (yes, a bit simplified, I know) Then they decide to give me a 200eur coupon for their store and give it to me (to my company), and this is counted towards my income (2200eur now). If i actually need stuff from their store, I use it, so now I earned 2200eur gross, spent a 200eur coupon in their store and 800eur anywhere, I have 1200eur of profits, and even after tax I earn more than I did before - with 20% income tax, I'd have 960eur of profit in cash form. On the other hand, if I don't need their services, and can't sell the coupon to someone else, the situation is different. I still got 2200eur of income (2k+200eur coupon), spent 1000eur in other stores, get taxed on the 1200eur, technically still have 960eur of profit, but 200 of those are in a form of a worthless coupon, and only 760 in cash - so their usless coupon is actually costing me 40eur.

elliekelly 5y ago

I think maybe I was (am?) reading too much into it because when I initially read that paragraph it just left me more confused! I guess I don’t really understand how the accounting of it works because they called it a “revenue share” which made me think one sale would result in: $80 in developer revenue $20 in Amazon revenue But it also said the AWS credits will be based off of the developer’s revenue and judging by the “equivalent of 90%” it would seem that Amazon sees the transaction as more like: $100 in developer revenue ($20) in developer expenses to list on the app store resulting in $20 in Amazon revenue But I wouldn’t consider that revenue sharing?

biztos 5y ago

From the quoted paragraph I get: You sell for $100. Amazon was taking $30. Now Amazon takes $20 and gives you a "promotional credit" of 10% of the $80, or $8. So if you use all of the "promotional credit" then you make $88 which is not quite the equivalent of 90% but pretty close. Assuming "promotional credit" means just regular credit you can use for anything on AWS, I wonder how much of this credit either gets left on the table (don't need AWS, credit expires) or stimulates further spending for Amazon (let's use AWS, it's "free"). It might be interesting to have that extra 8% not booked as revenue, but IANAn Accountant.

handrous 5y ago
What are the tax implications of this? Is that $8 income?
- ezekg 5y ago
  Why would a credit be taxable? Regardless, you don't pay taxes on expenses anyways. IANAL.
  - ajsnigrutin 5y ago
    You've received something with a monetary value, so it's (maybe?) counted as revenue. If it's taxed, and you don't actually use it, you'll be paying tax on something that you don't need.
    - tedk-42 5y ago
      Not quite revenue, if you're already hosting your app on AWS and paying AWS for that, those expenses decrease. But in no way are AWS giving away money so to speak. They are trading their commission from your app for compute they can offer
      - ajsnigrutin 5y ago
        I think a tax lawyer would have to answer this, and that it probably depends on the country. In my country, I (even if "I" means a company) can receive a business gift with a maximum value of 42eur, twice per tax year from one company - everything above that is taxed. Let's say i did some work for a local store and charged them 2000eur for my work. To do my work, I had 1000eur of expenses. I pay tax on 1000eur difference. With eg. 20% income tax, I'd have 800eur of profit. (yes, a bit simplified, I know) Then they decide to give me a 200eur coupon for their store and give it to me (to my company), and this is counted towards my income (2200eur now). If i actually need stuff from their store, I use it, so now I earned 2200eur gross, spent a 200eur coupon in their store and 800eur anywhere, I have 1200eur of profits, and even after tax I earn more than I did before - with 20% income tax, I'd have 960eur of profit in cash form. On the other hand, if I don't need their services, and can't sell the coupon to someone else, the situation is different. I still got 2200eur of income (2k+200eur coupon), spent 1000eur in other stores, get taxed on the 1200eur, technically still have 960eur of profit, but 200 of those are in a form of a worthless coupon, and only 760 in cash - so their usless coupon is actually costing me 40eur.