No revenue tax: how app store fees compound

Every dollar a user pays in your app goes through a cascade of deductions before it reaches you — store commission, then (if you use a revenue-share billing service) a second commission on top. This post breaks down the math at each revenue tier and explains why flat-fee billing infrastructure changes the equation, especially as you scale.

The commission stack

For a typical subscription app using a revenue-share billing provider, the fee stack looks like this:

$10 user subscription
  - $1.50 Apple/Google (15% small business rate)
  - $0.085 Revenue-share billing tool (~1% of $8.50 net)
  = $7.585 to you

Effective rate: 24.15%

At the 30% standard store rate (for apps above $1M in annual revenue per store), it gets worse:

$10 user subscription
  - $3.00 Apple/Google (30% rate)
  - $0.07 Revenue-share billing tool (~1% of $7.00 net)
  = $6.93 to you

Effective rate: 30.7%

How it scales (and why percentage fees hurt more as you grow)

The defining characteristic of percentage-based pricing is that your costs scale linearly with revenue. At $10,000 MRR, a 1% billing fee is $100/month. At $100,000 MRR, it is $1,000/month. At $500,000 MRR, you are paying $5,000/month — for the same infrastructure that cost $100/month at launch.

The store commission is unavoidable (unless you build your own payment processor outside the stores). But the billing infrastructure fee is optional — and it should not compound with the store commission. Revenue-share billing tools charge their percentage on your gross subscription revenue, which means you are paying their fee on revenue the store has already taken a cut from.

Flat-fee: costs fall as a percentage of revenue

Flat-fee pricing inverts the curve. With Tierux, you pay a fixed price per active subscriber tier, regardless of how much revenue those subscribers generate. As your ARPU grows, your billing cost as a percentage of revenue falls:

500 subscribers  at $10 ARPU = $5,000  MRR → Tierux: free          (0.0%)
1,000 subscribers at $10 ARPU = $10,000 MRR → Tierux: $39/mo        (0.39%)
5,000 subscribers at $10 ARPU = $50,000 MRR → Tierux: $159/mo       (0.32%)
10,000 subscribers at $10 ARPU = $100,000 MRR → Tierux: $309/mo      (0.31%)
50,000 subscribers at $10 ARPU = $500,000 MRR → Tierux: $1,509/mo    (0.30%)

Compare this to a 1% revenue-share tool, which would bill $100, $1,000, and $5,000 at those same tiers — and the gap widens as you grow.

The ARPU amplification effect

If your ARPU is higher than $10, flat-fee pricing becomes even more favorable. At $25 ARPU with 5,000 subscribers ($125,000 MRR), Tierux still bills $159/month (0.13%), while a 1% revenue-share tool bills $1,250/month. The higher your ARPU, the more flat-fee pricing saves you.

Revenue-share pricing is cheap at launch and expensive at scale. Flat-fee pricing is the opposite — and most apps will be at scale far longer than they will be at launch.

Use our revenue-share calculator to run the numbers at your current MRR.