Google halves Play billing fee to 15% for developers on first $1 mn revenue

Google Play will from July 1 slash by half its 30 per cent billing fee for developers globally when they make the first $1 million of their annual revenue, said the company on Tuesday.

Apps that sell digital goods in the Play Store have to use the platform’s billing system, which allows the tech giant to collect a percentage of in-app purchases as a fee. The developers are required to use the Play billing system – and therefore pay a service fee – if they implement in-app sales of digital goods. With this change, 99 per cent of developers globally that sell digital goods and services with Play will see a 50 per cent reduction in fees.

“These are funds that can help developers scale up at a critical phase of their growth by hiring more engineers, adding to their marketing staff, increasing server capacity, and more,” said Sameer Samat, vice president, Android and Google Play.

While these investments are most critical when developers are in the earlier stages of growth, scaling an app doesn’t stop once a partner has reached $1 million in revenue.

“We’ve heard from our partners making $2 million, $5 million and even $10 million a year that their services are still on a path to self-sustaining orbit,” said Samat. “This is why we are making this reduced fee on the first $1 million of total revenue earned each year available to every Play developer that uses the Play billing system, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed.”

Once developers confirm some basic information to help Google understand any associated accounts they have and ensures it applies the 15 per cent properly, this discount will automatically renew each year. “We look forward to sharing full details in the coming months,” said Samat. 

Last year the company had clarified the requirements of Google Play’s Payments policy. It explained that the service fee for Google Play is only applicable to developers who offer in-app sale of digital goods and services. More than 97 per cent of apps globally do not sell digital goods, and therefore do not pay any service fee. For the developers in India that do sell digital goods, but have not yet integrated with Play’s billing system, they continue to have until March 31, 2022, as announced previously. For the thousands of developers in India that are already using Play to sell digital goods, they can start receiving the benefit of this change as soon as it goes into effect in July.

Last October, some of the Indian start-ups and unicorns made claims about Google abusing its monopoly, enforcing the billing system, and take a 30 per cent commission on the transactions. All apps distributed on the Google Play Store, were offering in-app purchases of digital goods, needed to use Google Play’s billing system. Google had said this wasn’t new and its payments policy has always required this. It had said Google Play billing had always taken a 30 per cent commission on these transactions. It had said this will only apply to less than 3 per cent of developers with apps on Play Store, as 97 per cent anyway don't offer in-app purchases of digital goods, and therefore don't need to use Play billing services. 

Last year, Google then stretched its deadline for Indian app developers to comply with a new billing system for commission fees by six months. This development came days after Paytm founder and CEO Vijay Shekhar Sharma along with other top tech entrepreneurs started spearheading the campaign for the country to have its own app store.

“As a platform, we do not succeed unless our partners succeed,” said Samat. “We look forward to seeing more businesses scale to new heights on Android, and to further discussions with the Indian developer community.” said Samat.