The Walled Garden Economics
Learn why the 30% App Store Commission destroys hundreds of thousands of startups before they ever launch, and why physical goods are mathematically exempt.
The 30% Standard Commission
Apple and Google operate global walled gardens. If your app sells a "Digital Good" (a sword in a game, a dating profile boost, a PDF guide), Apple/Google physically intercept the credit card transaction, keep 30% of the gross revenue, and hand you the remainder. This is commonly referred to as the "Apple Tax".
If you build a SaaS product on the web and use Stripe, your payment processing fee is usually `2.9% + $0.30`. The App Store tax is exactly 10x higher than the free market web standard.
The Exception: Physical Goods
Why don't Uber and Amazon pay the 30% tax?
Technically, the App Store rules exempt "Physical Goods" and "Real-World Services". If you use an App to hail a physical taxi, or order a physical book, Apple takes 0%. However, if you order an eBook to read on your phone, Apple takes 30%. Because Spotify sells "Digital Music Access", they lose 30% of all their revenue, severely restricting their ability to pay artists.
The Small Business Exemption
Following intense anti-trust pressure from Epic Games (Fortnite) and international governments, Apple and Google instituted a "Small Business" program:
- If your development studio makes LESS than $1,000,000 a year, the commission drops to 15%.
- If you exceed $1,000,000, the commission reverts to the catastrophic 30%.
- If you sell a recurring subscription, Year 1 is taxed at 30%, but if the user stays subscribed for over 12 months (Year 2+), the tax drops to 15%.
If you spend $60 to acquire a user via Facebook Ads, and they buy $100 of digital goods, you might assume you made $40 in profit. However, if Apple takes $30, your true profit is technically $10, completely destroying your scaling mathematics.