Is the App Store Small Business Program worth it?

A million dollar question

Developers making less than $1 million annually benefit from the App Store Small Business Program, which reduces Apple's app store fee to 15%.

However, once earnings exceed this cap all future transactions are subject to Apple’s standard 30% fee.

Developers are mandated to disclose all affiliated accounts because the $1 million threshold is determined by the cumulative earnings of all these accounts, so spreading income across multiple apps won’t keep the threshold at bay.

This sudden increase can significantly impact profitability, especially for businesses with tighter margins.

Can your app still grow while staying under the $1M threshold?

In most cases, app developers approaching the $1 million threshold assume that there’s no escaping the 30% fee once the threshold is met, seeing it as a consequence of an app's success.

It’s not uncommon for developers on the App Store Small Business Program to purposely cap their app’s growth either, intentionally flying below the sub-$1 million threshold to avoid higher fees on all future revenue.

This isn’t necessary.

App developers have a powerful alternative option up their sleeve, allowing them to grow without limitation and stay below the $1 million threshold.

Enter Web2App.

What is Web2App?

Web2App refers to the process of converting then monetizing traffic on the web, before directing users to your app. 

For most subscription apps doing web2app, traffic is sourced from the web, funneled through a web-based onboarding, sign-up and purchase process, and then directed to the app post-payment.

Most importantly, a Web2App strategy isn’t launched instead of selling your app on the App Store, but is done in addition to it. 

If your business takes a hybrid approach to Web2App - funneling new customers through your web channel while keeping existing subscriptions in the Apple ecosystem - you can effectively manage your fee structure. 

This works because the threshold applies specifically to in-app and App Store purchases.

As outlined in our Web Revenue Lab series by App Growth Marketer of the Year, Nathan Hudson, this is a completely legitimate way of operating and is not forbidden by Apple’s Ts&Cs.

Other Web2App benefits for smaller app developers

As well as allowing app developers to keep more revenue, a Web2App strategy will:

• Improve cash flow: Receive payouts sooner than the App Store's up-to 60-day payment cycles, so you can reinvest in growth faster
• Give greater marketing control: Avoid Apple's privacy restrictions (SKAN / ATT), so you can get more targeted attribution data for your paid ads, and run more efficient campaigns.
• Experiment Freely: Web2App allows users to test pricing, messaging & offers outside of the App Store's restrictions, so you can improve conversion and LTV.
• Boost audience expansion: Reach users outside of typical app store audiences by drawing from a wider source.
• Experiment Quickly: Tweak funnels without waiting for the App Store's approval, so you can rapidly A/B test & optimize for your personas.
  
  Nathan Hudson explains more on the top benefits of Web2App here

What kind of apps are best for Web2App?

Not all mobile apps benefit equally from a Web2App strategy. Apps that need to build trust, demonstrate value, or personalize experiences before a user commits to downloading tend to benefit most from the Web2App approach. 

Lifestyle, wellness, language learning

Why: Users benefit from personalized onboarding/assessment before committing; higher-value subscriptions justify web investment

Examples: Calm, Headspace, MyFitnessPal, Noom, Duolingo

Content-based apps

Why: Web allows content previews and personalization before download; lower friction for content discovery
Examples: Blinkist, Audible, Scribd

Dating apps

Why: Profile creation and matching can begin on web; social proof and community features work well pre-app

Examples: Hinge, Bumble, Coffee Meets Bagel

Productivity tools

Why: Demonstrating value proposition on web increases conversion; often have higher subscription price points

Examples: Goodnotes, Notion, Todoist, TickTick

High-value subscription apps

Web funnel justifies customer acquisition cost for $50+ annual subscriptions; longer sales cycle benefits from web nurturing

Examples: ChatGPT Plus, Masterclass, Ladder (insurance), Future (coaching)

So, what’s the catch?

Web2App is a clear opportunity to grow revenue for the right apps, but partially shifting away from Apple’s walled garden brings operational challenges.

One of the app stores’ benefits is the payment and billing infrastructure they provide. They not only handle localized payments but also take care of refunds and chargebacks, all while managing sales taxes globally. But when selling directly on the web, these become your responsibility.

Paddle is the app store for the web

Paddle is more than just a payments solution. 

We're a merchant of record, meaning that when you sell on the web, we take on the responsibility for localized payments, refunds, chargebacks & sales tax - just like the app stores do when you sell with them.

We handle the entire sales process end-to-end (payments, refunds, tax), with a few key differences: lower fees, more control and complete flexibility over how you sell.

Apple’s Small Business Program provides a temporary financial break, but developers approaching the $1 million threshold need a long-term strategy. Web2App enables sustainable growth without sacrificing profitability.

By shifting payments to the web and leveraging solutions like Paddle, app businesses can continue scaling without Apple’s 30% tax on success.

See how Paddle fuels your app’s growth