“The question is not whether 30% is fair. The question is whether a 30% toll on digital trade is sustainable once distribution is no longer scarce.”
The market is already pricing in the end of the 30% rule. Between regulatory pressure, new payment rails, and developer pushback, the effective commission on app revenue is drifting closer to 10 to 15 percent. The old app store tax still shows up in public pricing, but behind the scenes founders renegotiate, route around, or repackage it. The headline 30% is becoming more of an anchor than a reality, and that shift has real consequences for growth, funding, and business models.
Investors look at app store economics now with a level of skepticism that did not exist five years ago. The app store used to look like a stable toll road: fixed fee, predictable rules, near-total control of distribution. That story breaks once regulators force alternative billing, new platforms create parallel channels, and consumer behavior moves to web-first funnels. The question “Is 30% fair or extortion?” matters less as a moral debate and more as a valuation question: How much of that 30% is defensible profit versus negotiable margin that founders can claw back over time?
The trend is not clean. Some categories still absorb the full 30%, especially games and impulse purchases where convenience drives conversion. Subscription apps with strong brands often push users to the web. Marketplaces negotiate custom deals. Enterprise vendors bypass consumer app stores almost entirely. The numbers are not uniform, but the business value is clear: every point you shave off platform tax compounds into retention of marketing spend, longer runway, and a higher multiple on exit. A startup that can run at a 15% effective app tax instead of 30% can reinvest the difference into performance marketing, product, or customer support and outgrow a rival that accepts the default.
At the same time, the platforms still control key discovery channels. The app store homepage, charts, and search rankings remain meaningful sources of organic traffic, especially for B2C products. Founders sit in a trade-off: accept the 30% and tap into friction-light purchasing, or steer users to cheaper rails and risk drop-off. The more your product behaves like a brand, the less you need the store. The more your product behaves like a commodity, the more you are stuck paying.
“Most founders who complain about the 30% are not really arguing about fairness. They are arguing about who gets to own the customer relationship and the margin stack.”
The core of the debate is margin ownership. In physical retail, a 30 to 50 percent cut for distribution is normal. Supermarkets, fashion retailers, and big box stores all take similar or larger percentages. The difference: those retailers negotiate and co-fund marketing. The app stores take their cut and still charge you for user acquisition through search ads and paid promotion. That double spend is where many growth teams feel the real pain.
Where the 30% App Store Cut Came From
The 30% number did not appear out of nowhere. It came from existing digital content models. Apple built the App Store on the same pricing logic that powered iTunes for music and movies. Steam did something similar for PC games. Carrier decks and console stores already worked with 30% type fees. The original argument was simple: the platform handles hosting, payment, security, fraud prevention, review, and distribution. In return, the platform takes 30% of gross.
At launch, that trade looked attractive. Before the app stores, independent developers struggled to get paid, suffered high chargeback rates, and had no real access to a global audience. A 30% toll in exchange for global distribution and trust felt like progress. The business value was direct: more sales, less friction, lower fraud, and no need for a direct billing stack.
Over time, several things changed:
1. Payment tech matured and became cheaper.
2. Cloud hosting costs dropped sharply.
3. Performance marketing on social networks gave developers their own demand channels.
4. Regulators began to question closed payment systems.
5. The largest apps built their own brands bigger than the stores themselves.
The original bargain started to look one-sided. The app store no longer owned all the distribution and payment value. Yet the 30% stayed as a fixed anchor.
“The 30% rate is a relic of a time when the store solved problems for developers that are now cheap or free to solve on their own.”
From an investor lens, that mispricing created a tax wedge. A significant share of value created by product and marketing flows to the platform rather than remaining with equity holders. That does not just reduce profit; it distorts product design. Teams build pricing, packaging, and funnel mechanics around a fixed tax instead of around customer value.
How 30% Hits Your Growth Model
The biggest question founders need to answer is not “Is this fair?” but “Can my growth model support this margin drag over the next five years?”
If your app generates $10 million a year in gross revenue through the store, the 30% cut is $3 million. That $3 million could otherwise fund:
– A larger performance marketing budget
– More engineers and product experiments
– Customer support and customer success teams
– Expansion into new markets
The real hit shows up when you layer the 30% fee on top of paid acquisition. Many performance campaigns effectively buy revenue at a 20 to 40 percent blended marketing cost. With an extra 30% platform tax on gross, your variable cost of revenue can approach or exceed 60%. That leaves very little contribution margin to cover fixed costs.
Here is a simple view.
Impact of 30% Store Cut on Unit Economics
| Metric | No Store Tax (Direct Billing) | With 30% Store Tax |
|---|---|---|
| Average order value (AOV) | $100 | $100 |
| Platform commission | 0% | 30% ($30) |
| Gross margin before marketing | $100 | $70 |
| Marketing cost per order | $30 | $30 |
| Contribution margin | $70 | $40 |
| Contribution margin % | 70% | 40% |
With the same product and same marketing, a 30% tax cuts your contribution margin by 43%. That has direct implications on how fast you can profitably grow. If your investors expect high growth with a path to profitability, the math starts to break.
For a game that monetizes through whales and in-app purchases, the store cut might be acceptable. High revenue per user can offset the commission. For a low-margin subscription with real service delivery behind it, or for a marketplace that passes most revenue to sellers, that same 30% can destroy the business case.
The Regulatory Squeeze On 30%
Regulators in the EU, South Korea, India, and other regions now treat app stores less like neutral platforms and more like controlled distribution channels with gatekeeping power. Several trends stand out:
– Requirements for alternative billing options
– Caps or scrutiny on default search and ranking behavior
– Limits on how platforms can bundle their own services
– Fines or investigations around anti-steering rules
This pressure does not instantly erase the 30% headline number. It does something more subtle: it opens a margin negotiation for any serious developer. Once one country forces a platform to offer alternative billing, the precedent spreads. The store can still charge for access, but the range widens. Commissions drop to 15% for small developers, or for long-term subscriptions. Custom deals appear in categories where supply is scarce.
From a business value standpoint, this matters because it introduces variance. Founders that treat 30% as a fixed rule leave money on the table. Founders that track each platform, region, and category can often run blended fees much lower.
“Every time regulators crack open a closed billing system, you do not just get a new payment button. You get a new negotiation on who owns the margin.”
The other side of regulation is risk. Investors now discount the durability of store economics. If a platform trades at a valuation that assumes a perpetual 30% rake, that multiple comes under pressure. Public market re-pricing flows back into product roadmaps, fee experiments, and BD conversations with developers.
For startups, that shifting risk can play in your favor. A platform that wants to protect its multiple has a strong incentive to show developer friendliness. That often means better revenue share for strategic categories, promotion slots, or co-marketing funds.
Comparing Platform Fees Across Channels
To judge whether 30% is fair, it helps to compare across other channels that handle distribution or payments.
Platform Fee Benchmarks
| Channel / Platform | Typical Take Rate | What You Get |
|---|---|---|
| Apple App Store (standard) | 30% (15% in some cases) | Distribution, billing, review, basic discovery |
| Google Play Store (standard) | 30% (15% for some tiers) | Distribution, billing, review, basic discovery |
| Steam (PC gaming) | 30% typical base | Distribution, community, discovery, updates |
| Stripe / Adyen | 2% to 4% of transaction | Payments, fraud tools, global cards |
| Credit card processing via bank | 2% to 3% | Payments, settlements |
| Physical retail (supermarket shelf) | 30% to 50% | Distribution, shelf space, brand exposure |
| Amazon Appstore | Usually 20% to 30%, with incentives | Distribution on Amazon devices |
| Facebook / Instagram Shops | 0% to low single digits (varies) | Checkout plus social discovery |
Seen in this context, 30% is not out of line with physical retail. It looks high compared with pure payments. That difference makes sense: app stores claim they sell distribution plus trust, not just card processing. The fairness question turns into a performance question: does the additional distribution and trust that the store provides justify a 10x premium over standalone payments?
Founders answer that differently by vertical:
– Hyper-casual games: often yes, because frictionless purchase and store discovery drive high sales.
– SaaS subscriptions: often no, because users already interact on the web and most revenue can run through direct billing.
– Marketplaces: usually no, unless the marketplace itself is native-only and cannot build a strong web funnel.
Effective Take Rates: What Developers Actually Pay
The headline 30% hides actual variation. In many markets, the effective fee is already lower because developers:
– Qualify for small business tiers
– Push larger buyers to web checkout
– Use third-party billing where allowed
– Run hybrid models: store for first month, web for renewals
Here is how that looks in practice.
Example: Subscription App Mixed Billing
| Channel | Share of Revenue | Nominal Fee | Weighted Fee Contribution |
|---|---|---|---|
| iOS App Store (first year subs) | 40% | 30% | 12.0% |
| iOS App Store (renewals) | 20% | 15% | 3.0% |
| Web (Stripe billing) | 40% | 3% | 1.2% |
| Total | 100% | 16.2% blended |
In this case the effective platform tax is 16.2% on gross revenue, not 30%. For many subscription-based companies this is the reality. They play by store rules enough to avoid being thrown out, but they design their funnels to steer serious users to cheaper channels over time.
From a valuation standpoint, that blended rate is what matters. If your data room and pitch deck still model revenue with a hard 30% platform cost because “that is the rule,” you are understating your ability to capture more margin and reinvest it into growth.
Business Models That Break Under 30%
Some categories struggle badly with the full 30% cut. These include:
– Marketplaces that already charge sellers a fee
– Content platforms that pay creators a share of revenue
– Apps that sell physical goods
– Low-margin education or productivity tools with service delivery costs
Take a marketplace that charges sellers 10%. If the app store takes 30% of gross, the effective economics look like this:
1. Customer pays $100 in the app.
2. Store takes $30.
3. Marketplace receives $70.
4. Seller is owed $90 (100 minus 10% marketplace fee).
The math is impossible. The marketplace would lose $20 per order just paying the seller. That is why many marketplaces do not allow in-app payments or route users straight to mobile web. The 30% store fee simply cannot coexist with reasonable seller economics.
“Whenever you see a major marketplace block in-app purchases, you are looking at unit economics that break under the 30% rule.”
Content platforms, like creator subscription products, face similar math problems. If a platform gives 70% of revenue to creators, and a store takes 30%, the platform keeps zero. The only ways out are:
– Move billing off-store.
– Lower creator share and risk churn.
– Raise prices and risk lower conversion.
Most serious businesses in these categories now choose the first option. This shifts the question for a founder: do you want store-based convenience or a business model that can survive longer than a single funding cycle?
Strategies Founders Use To Beat The Tax
From a growth perspective, “beating” the tax does not always mean avoiding it. It means designing a system where the store cut does not crush your unit economics.
Some patterns that work in practice:
1. Web-First Funnel With App As Utility
You acquire users via web and mobile web through search, content, and paid campaigns. They subscribe or buy on the web using standard card processing. The app becomes a companion to an existing account, not a primary sales channel. Think language learning, fitness, or SaaS.
This approach:
– Keeps transaction fees low.
– Protects your direct customer relationship.
– Limits exposure to sudden platform rule changes.
The trade-off: you lose some impulse purchases that happen in-store. For high-consideration products with monthly subscriptions and trial periods, this hit is often smaller than the margin you save.
2. Hybrid Billing With Clear Value Gaps
You keep basic plans on store billing for ease of use. You reserve premium tiers, bundles, or annual plans for web purchase only. Inside the app you make the value difference clear without violating anti-steering rules.
Example pattern:
– In-app: monthly plan at $14.99, no discount.
– On web: annual plan at $99, team plan, or business features.
You price the in-app plan with enough margin to tolerate the 30% fee. Power users who care about savings naturally seek the web upgrade. Casual users stay in the store and cross-subsidize.
3. Segment-Based Negotiation
At a certain scale, you are no longer a typical developer. Large subscription apps, major games, and media brands can often negotiate better terms, even if those terms are not public.
Investors look for this in late-stage deals: does the company have platform agreements that improve margin? If yes, earnings quality looks better and the company can support higher marketing spend.
For founders, that means:
– Tracking your revenue concentration by platform.
– Documenting user engagement and retention stats.
– Presenting a case to the platform that your app drives device sales or usage.
The platform cares about pure revenue, but also about device stickiness and category completeness. If your app is critical in a category, you have leverage.
Pricing Models Under a 30% Tax
App store fees push founders toward certain pricing structures. Some handle the tax better than others.
Comparison of Pricing Models Under 30%
| Model | Example | Sensitivity To 30% Fee | Business Impact |
|---|---|---|---|
| One-time purchase | $4.99 utility app | Moderate | Lower margin on each sale, but simple to model; tax hits total lifetime revenue at once. |
| Monthly subscription | $9.99 / month productivity app | High | Recurring hit on revenue; platform cut compounds over user lifetime. |
| Annual subscription | $79 / year content app | High, but more room | More margin per transaction to absorb fee; discount can offset perceived price jump. |
| In-app consumables | Game currency | Lower per unit, high volume | Games price items with tax in mind; whales absorb cost; strong fit with store model. |
| Marketplace fee | 10% seller commission | Very high | Often non-viable without off-app payments; fee stack becomes too heavy. |
In practice, subscription and marketplace models fight the 30% the hardest. One-time purchases and in-app items can be adjusted more easily, because user perception of price is less anchored and margin is built into each unit.
How Investors View 30%: Risk or Moat?
For investors, the 30% question cuts two ways.
On one side, app stores look like strong businesses. High-margin revenue, recurring flows from millions of small developers, and strong lock-in on the consumer side. On the other side, those same strengths attract regulators and developer resistance.
When investors look at app-heavy startups, they ask:
– How much revenue runs through store billing?
– What is the blended platform fee?
– How much of that fee is genuinely unavoidable?
– What is the plan if regulators open up more billing options?
– How will CAC and LTV change if the effective fee drops?
A company that depends entirely on store billing at 30% faces multiple risks:
– Policy risk: rule changes can block core monetization features.
– Pricing risk: you cannot cut prices without taking a direct hit to contribution margin.
– Channel risk: your primary channel is controlled by a single partner.
A company that treats the store as one of several channels, with web and direct relationships built in, looks stronger. Lower platform tax increases free cash flow. More channels reduce risk. From a valuation perspective, that difference shows up in higher revenue quality scores and better exit narratives.
“Investors are not just asking ‘How much do you pay the store?’ They are asking ‘How fast can you reduce that dependence without losing growth?'”
Startups that can show a path from 30% to a blended 10 to 15 percent within a few years, through channel mix and product design, stand out in fundraising conversations. The margin they reclaim can fund expansion while keeping dilution lower.
Is 30% Fair Or Extortion From A Business View?
Fairness is a moral frame. Extortion is a legal one. The business frame is different: is the platform earning its 30% every year, or extracting value that competitive and regulatory forces will erode over time?
Several factors matter when judging this:
1. **Incremental value of distribution.** If the store genuinely drives a large share of new customers you cannot reach otherwise, a higher fee looks more fair. If you already acquire users through content, search, or social, the store adds less.
2. **Substitutability.** If you can switch users to web or another billing method without heavy friction, the 30% becomes a starting point for negotiation, not a fixed law.
3. **Bargaining power.** As your app becomes central for users or categories, the store faces greater risk if you leave or limit in-app features. That shifts the fairness discussion.
4. **Historical versus current cost base.** The costs that justified 30% at launch (bandwidth, limited payments, high fraud) are much lower now. If the fee does not adapt, developers interpret it as rent-seeking rather than service pricing.
Many founders privately use the word “extortion” when they describe forced in-app billing and anti-steering rules. The analogy is simple: the store owns the road, demands a high toll, and does not allow any sign that mentions cheaper parallel routes. Whether regulators accept that framing is a separate question. For your business, the point is that such “taxes” behave like friction on growth.
The market is already responding:
– Governments push for more open billing and disclosure.
– Users gradually learn to buy direct from brands.
– Platforms experiment with lower fees for loyalty or volume.
From a growth standpoint, the correct stance is pragmatic:
– Model scenarios at 30%, 20%, 15%, and below.
– Build funnels that can adapt as rules shift.
– Protect your direct user relationship wherever possible.
The less your business relies on compelled fees and closed channels, the more room you have to adjust pricing and marketing in your favor.
How To Model Your Own App Store Exposure
To move beyond debate, you need a clean view of your own exposure. A lot of companies still only understand their app revenue at a top line level and do not break out store tax as a separate cost center.
A simple approach:
1. Segment Revenue By Channel
Group your revenue into at least:
– iOS in-app purchases
– Android in-app purchases
– Other store channels
– Web and desktop direct billing
– Enterprise or direct contracts
Within each, split subscriptions by:
– First term
– Renewal
– Country or region (to track regulatory changes)
2. Assign Realistic Fee Rates
Do not just plug 30% everywhere. Use your actual tiers, including reduced fees on renewals and small business programs. Apply your real card and payment processor fees on web.
3. Calculate Blended Platform Fee
Compute:
– Platform fees / total revenue
– Platform fees / gross profit
Track this monthly. As you shift users to cheaper channels, this blended rate should drop.
4. Link To CAC and LTV
Rebuild your unit economics with and without store fees:
– LTV including platform tax
– LTV on web-billed users
– CAC by acquisition source
This makes it clear where you gain the most by reducing app store dependence. If LTV on web-billed users is 40% higher, it justifies funnel experiments that push more traffic to those flows.
Where The 30% Debate Goes Next
The 30% number will likely stay on paper for years, even if relatively few serious developers pay the full rate on all revenue. It anchors negotiations, shapes regulation, and influences how new platforms design their economics.
The more relevant question for founders and investors is: what does the margin stack look like in 3 to 5 years?
Several trajectories seem plausible:
– **Blended rates drift down.** Through a mix of small business programs, renewal discounts, custom deals, and alternative billing, many serious apps converge toward a 10 to 20 percent effective fee.
– **Vertical stores and direct channels grow.** Gaming, creator tools, and enterprise apps route more revenue through vertical or direct channels, treating the big app stores as install hubs rather than monetization hubs.
– **Regulation fragments app economics.** Different regions enforce different rules, pushing you to run region-specific billing strategies. Companies with solid billing and data infrastructure benefit.
– **Platforms trade fee for data or exclusivity.** Some stores accept lower fees from strategic apps in exchange for device features, data sharing, or time-limited exclusives.
For your own roadmap, the main lesson is simple: treat app store fees as a strategic variable, not a fixed law. Build enough flexibility into your product, pricing, and funnel that you can shift channels as economics evolve.
From that angle, the fair vs extortion debate looks less important than your posture. If you accept the 30% at face value and build your entire business on closed billing, you carry that cost forever. If you treat it as a starting point and design routes around it, you reclaim margin, improve your growth options, and build a company that is harder to squeeze, no matter who owns the store.