Mythbusting: Do the app stores really take 30% fees? Or is it more?

By
Archie Stonehill
Feb 16, 2024

You’re a developer making $10M per year on your game. Congrats! 

Now, we all know that the app stores take a 30% commission on your players’ spend. So, if I ask you how much the stores are making off your game, you’d probably say $3M, right? … Wrong. 

The actual answer is much more - in fact, it’s closer to $4.3M. How can 30% of your $10M equal $4.3M, you ask? Let me explain. 

Think gross, not net

The app stores take its 30% commission off of gross revenue - which is how much players are actually spending. But us game developers think of revenue in terms of net revenue, since it’s money we actually receive and what we use to calculate ROAS, paybacks, LTV, etc. So, to understand how much the stores are taking from your net revenue, you need to look at the equation a bit differently. 

Let’s say a player spent $100 (your gross revenue). Apple and Google take $30 while you’re left with $70 (your net revenue). If you think about how much they took from your net revenue, you’d have to calculate $30 out of $70 … which is 43%. Suddenly, that feels like a much heavier price to pay. 

To look at it another way, if you see on your dashboard that you earned $10M in net revenue from in-app purchases, it means your gross revenue was $14.3M. That’s because your net revenue, in this case $10M, is 70% of your gross. Looking at the math, we’d solve for x as your gross revenue: 

Net revenue = 0.7*(gross revenue)
10,000,000 = 0.7*x
10,000,000 / 0.7 = x
x = 14,285,714

So if your gross revenue was $14.3M, the app store's 30% cut was $4.3M of what players actually spent, and what you should have earned. 

You can see the chart below, you might think the commission is $3M but in fact there’s a $1.3M “hidden fee” that equals up to that $4.3M. 

The 30% fee is on gross revenue

Earning more through a web shop

Now let’s see how much revenue you’d save by shifting some of that player spend to a web shop. If you make $100 gross, the in-app cut of 30% would leave you with $70. A web shop, though, might take only 10% - so your net revenue out of $100 gross would be $90. That means you’re getting 29% more revenue on the web shop. If the web shop fee is even lower, at 5%, you’d get $95 - which is 35% more revenue than you’d earn in-app. 

To recap, out of $100 gross revenue:

  • 30% app store commission = $70
  • 10% web shop commission = $90 (29% more revenue)
  • 5% web shop commission = $95 (30% more revenue)
Introducing Stash payment flow

Impacting your bottom line revenue

Of course, you likely wouldn’t shift 100% of your player spend to your web shop. But if you can shift 10% or even 25% like Playtika and Huuuge do, it can have a major impact on your bottom line. 

For example, Playtika reported that 25% of its revenue came through web shops in 2023, totaling to $607M, and the transaction fee was about 3-4%. So by funneling this revenue through direct-to-consumer channels instead of the app stores, Playtika saved about $161M in app store fees! 

Impacting your user acquisition strategy

Critically, because the extra revenue you’re losing to the tax impacts your bottom line, it also impacts your user acquisition and buying power. There are many games today that - while fun - can’t scale because their RPI or LTV is lower than their CPI. But if it weren’t for the app store tax, that RPI could potentially be high enough for some of these games to scale. In fact, there might be entire genres and mechanics that could have gotten off the ground with an extra boost and lower tax. 

Following that logic, shifting a portion of your revenue outside the app stores could transform your CPI/RPI calculation - you may find you can suddenly spend 40% more on your CPIs. That kind of boost would give you a significant competitive advantage in the ad networks, as you’ll be able to win many more impressions. 

Start saving with a web shop

Clearly, there’s a lot of revenue you can earn by shifting some player spend to a web shop you own - and that’s not including additional revenue you can drive from loyalty programs and discounts strategies. 

To start saving, get in touch with Stash about building your own white label web shop. 

Or, play around with our demo web shop to see what all the hype’s about.

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