Developers who make apps for the Shopify App Store will now keep 100% of the earnings on their first $1 million in revenue. That’s one of a host of changes Shopify announced in its recent Unite 2021 Conference.
Previously, the platform took a 20% commission on developer revenue from apps sold on its marketplace. Now, that number will drop to 0% up to the million-dollar mark. At that point, Shopify will begin taking a 15% cut of marginal revenue, which means only those earnings over the $1 million mark.
To illustrate, here’s an example.
Let’s say a developer brought in $2 million in app sales. Previously, Shopify would have taken a commission of 20% on the entire amount, or $400,000.
Under the new fee structure, only the second million is subject to a commission, and that commission is 15%. So, Shopify’s cut would be $150,000--a significant reduction.
And there’s another piece of good news for developers: the tally resets every year. The same commission structure will also be applied to website themes sold on Shopify’s Theme Store.
Shopify says its developer partners, who make apps that help merchants do everything from send emails to track inventory, earned a whopping $233 million in 2020. That’s more than earnings for the previous two years combined.
The sharp increase is thanks in no small part to Covid-19, which prompted a swift and massive shift to eCommerce. Shopify says the average merchant uses about six apps to run its business (we share a dozen of our favorites here).
The move follows similar ones by other major platforms including Apple, Google, Amazon and others, who’ve walked back app store fees after pushback from developers, lawsuits and antitrust investigations. Apple and Google now charge a 15% commission on the first million in developer earnings under their revised fee structures, which each come with their own particular stipulations. Amazon’s fee remains at 20%.
The Shopify announcement is great news for developers, especially those hovering right around the $1 million revenue mark. Many of them will now keep every dollar they earn on the App Store.
The changes go into effect August 1.