Apple's core technology fees in the EU could bankrupt Freemium app developers

App developers in the EU who choose to opt-in to Apple's new business terms must pay €0.50”Basic technology fees“Or a CTF per app installation of over 1 million installs, a model that would bankrupt free or free app developers.

Apple doesn't charge a fee for the first million “annual installs” of each iOS account each year, but after that, developers will start charging fees. A free or freemium app that goes viral and has been downloaded more than a million times may have to pay astronomical fees. Shown in the estimates Shared by developer Steve Troughton-Smith.

Under Apple's new business terms, a free or freemium app that gets 2 million annual “first installs” will need to pay an estimated $45,290 in fees per month, according to Apple fee calculatoror more than half a million dollars a year, even if no money is made.

This is an unsustainable model for free apps, and freemium apps must earn at least €0.50 per user to be able to break even with fees. A free app with thousands of installs from non-paying users may end up owing much more than it made. Developers will likely need to charge upfront to ensure their apps make enough money to pay CTF, as offering an app free to download can be risky if downloads exceed 1 million.

However, free and free app developers can choose to abide by Apple's existing App Store business terms rather than opt for the new terms. In this case, nothing will change, and app developers will continue to pay Apple a commission of 15 to 30 percent.

The €0.50 CTF applies to apps distributed through the ‌App Store‌ and through alternative app stores if developers choose the new business terms. With the ‌App Store‌, developers are charged a fee of €0.50 and must pay a commission of 10 to 17 percent to Apple. With the alternative app store, there is no commission. Fees can be estimated for existing terms and new terms Through the dedicated calculator Provided by Apple to developers.

Below is a breakdown of the available options:

• Current App Store Agreement -Developers pay Apple a commission ranging from 15 to 30 percent. Less than $1 million in revenue is a 15 percent commission through the ‌App Store‌ Small Business Program, and more than $1 million results in a 30 percent commission. Subscriptions require a 30 percent commission for the first year, and a 15 percent commission for the second year and beyond.
• New Terms, App Store Distribution – Commission decreased to 17 percent from 30 percent and 10 percent from 15 percent. There is an additional 3% fee for using Apple's payment system, so the commission is between 13 and 20% for a developer who chooses the new rules and uses in-app purchases. The 3 percent fee does not apply to developers using alternative payment systems. Developers must also pay €0.50 per app installation per user each year after 1 million app installations.
• New terms, alternative distribution to the App Store – There is no commission, but developers must pay €0.50 per app install per user per year after 1 million app installs.

According to Apple, the CTF applies to the first annual installation, which is the first time an app has been installed by an EU account within a 12-month period. After the first annual installation, the app can be installed any number of times with the same account for 12 months without any fees.

Apple waives fees for nonprofit organizations, accredited educational institutions, and government agencies that are approved to waive fees.

Apple's core technology fees can be obscenely expensive for apps like Spotify that have millions of users. An app that generates $10 million in sales through the ‌App Store‌ with 10 million “first installs” (aka 0.99 price) would need to pay Apple more than $500,000 per month.

EU app ecosystem changes are included in iOS 17.4, and developers who opt for Apple's new system will need to start paying fees starting in March when the update is released to the public.