Shopify cuts developer fees for first $1m in revenue

30 Jun 2021

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Developers will pay no commission fees on their first $1m in revenue every year in a significant change to Shopify’s app store business model.

E-commerce platform Shopify is lifting fees for some developers that distribute apps through its app store.

Developers will not be charged any fees on the first $1m they make through the store from August. That benchmark will reset every year.

The fee was previously 20pc. After the $1m mark, Shopify will now take a 15pc cut. The model applies to both the Shopify App Store and the Theme Store.

The announcement was made yesterday (29 June) during Shopify’s developer conference, Shopify Unite.

Shopify president Harley Finkelstein said the move was to make it “easier for [developers] to change the direction of the future of commerce and make a living doing it”.

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The Canadian company’s decision to cut app store fees come amid scrutiny on app store business models.

Most notably, Apple’s App Store is embroiled in a legal battle with Fortnite maker Epic Games in a bitter conflict over the commissions that the tech giant charges for apps in its store and the control it wields over what apps get onto the platform. Google’s Play Store has faced similar criticism over its commission fees.

Separately, Apple is facing a competition investigation from the European Commission over its App Store practices. The probe was launched after a complaint from Spotify over transactions fees.

Apple has reduced charges for smaller developers that earn less than $1m. Google has also reduced fees lately and Microsoft said last week that app developers will be able to avoid the 15pc commission fee in its Microsoft Store.

For Shopify, this change to its fee structure will have an impact on its revenue going forward. However, it will be hoping that in the long run that this move will attract more developers to the platform, eventually yielding more revenue.

In the first quarter of the year, Shopify booked revenues of $988.6m. This followed surging revenues in 2020 as the pandemic provided a boost for e-commerce businesses.

Jonathan Keane is a freelance business and technology journalist based in Dublin

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