Six months ago, Amazon announced that it would follow in the footsteps of Apple and Google by reducing how much revenue it keeps from Amazon Appstore purchases. Just 3 days from its self-imposed deadline of the end of the year, Amazon has made good on its promise by automatically reducing its cut of appstore revenue from 30% to 20% for all developers that earn less than $1 million a year. The improved revenue share rate for developers apparently started on December 22, 2021, but the second half of what Amazon is calling its Small Business Accelerator program, which will provide developers with free AWS promotional credits, won’t begin until sometime next year.
DISCLAIMER: I publish apps in the Amazon Appstore which earn me revenue. I earn less than $1 million per year and will therefore qualify for this program and will financially benefit from this change. For that reason, my opinions are biased, so I will list only the facts and keep my opinions out of this article.
In addition to the better revenue split of 80% to developers and 20% to Amazon, which used to be 70/30, Amazon will be giving developers AWS promotional credits equivalent to 10 percent of their revenue. There is no specific date or quarter when the AWS credits will begin to be given, other than in 2022, but Amazon says developers that qualify will be notified by email. To qualify for both the improved revenue share and the AWS credits, the developer must have earned less than $1 million in the prior calendar year.
Amazon has provided a few more specifics on how eligibility works, which were missing from the initial announcement earlier in the year. The $1 million earned cut-off is calculated by looking at the entire prior calendar year and is not a running value for the last 12 months. Once a developer that qualifies for the better 80/20 rate earns $1 million in any given year, they will immediately be moved to the worse 70/30 rate. A developer making more than $1 million, who is receiving the worse 70/30 rate, won’t be able to move into the better 80/20 rate until the next calendar year.
Both Apple and Google reduced their revenue share from 70/30 to 85/15 for developers earning less than $1 million. On one hand, Amazon’s improved rate is better for developers because their effective rate will be 90/10 if the developer uses all of the free AWS credits. However, if a developer does not need or use the 10% AWS credits earned, then Apple and Google’s program is superior.