Include VAT in proceeds calculation

  • 30 October 2021
  • 5 replies
  • 190 views

Badge +3

TL;DR: For 3rd party integrations, please update proceeds to take into account VAT so that it matches Apple’s proceeds and what the developer actually gets. 🙏

 

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We've been using our RevenueCat integration with AppsFlyer and Amplitude to calculate LTV and track marketing campaign profitability, however I just realized that proceeds reported by RevenueCat does not match Apple’s. 

 

If you choose 'report proceeds' in RevenueCat, it doesn't take into account VAT when sending the revenue which results in RevenueCat over reporting proceeds by up to 20% , which throws off marketing campaigns and LTV calculations.  😔

 

Here's an example of a sale in the UK: 

 

I've converted everything to US dollars for convenience. 

 

Price of product: $4.11

Proceeds reported by RevenueCat to Amplitude: $2.88

ACTUAL proceeds reported by Apple: $2.36

Difference = ~20%

image.png

 

FORMULAS:

 

It looks like RevenueCat is using this formula: 

 

proceeds = price * 0.7

 

Please update this to what Apple is using:

 

proceeds = price * (1-{VAT Rate}) * 0.7

 

This would make proceeds match what the developer is actually getting.  For countries that include VAT in the purchase price, the proceeds are currently overestimated by about 10-20%. All of Europe is included in this. 

 

Is this a bug? If not, is it possible to add this as a feature request? i.e. to make RevenueCat proceeds match Apple proceeds. 

PROPOSED SOLUTION:
 

If Apple’s web-hooks or receipts contain the VAT rate, VAT can just be subtracted from the revenue according to the formula above before reporting proceeds to 3rd party integrations. 
 

  If not, VAT rates can be tracked in an internal table that is updated monthly or quarterly. Lookup the VAT rate in this table and subtract the VAT before sending proceeds via third party integrations.  Add a note that the VAT amounts are estimated.  Even though there still may be small differences, it’ll be more like 1-3% vs 20% overall. 

 

Either solution would be highly valuable for anyone using RevenueCat to calculate LTVs and effectiveness of marketing campaigns. 🎉

 

 


5 replies

Userlevel 5
Badge +9

Hey @Ritvik!

The proceeds calculation currently is simply 0.7 or 0.85 times the product price, as you’ve noted. Including VAT in the calculation has been a feature request for a while now but something we’ve put off as higher priority items have jumped into the roadmap and we want to make sure we’re prepared to keep these tax calculations up-to-date. Your proposed solution of a lookup table that is re-populated monthly is probably the way we’d implement this in the future. Tagging @Jens for visibility too.

Badge +3

Hey @ryan ! 

Great to hear that it has been requested before and is on the roadmap. Do you know when it might be added? 


We use RevenueCat in observer mode for 3rd party integrations to help with marketing and subscription analytics (appsflyer, amplitude, facebook, apple search ads etc).

Unfortunately since VAT is not being removed, all these numbers are not accurate: 

 

  1. 📈 Marketing Campaign ROAS -  overestimates in proceeds can mean some campaigns may actually not be profitable and we don’t know by how much if they have multiple geos 
  2. 🕒 Marketing campaign payback periods - are currently overestimated
  3. 📊LTV Calculations - will be inaccurate, for example UK will be 20% higher than reality
  4. 🌏 Comparisons of geos - the revenue and LTVs per geo are not comparable, and so its hard to figure out which countries are the most effective for adspend
  5. 💵 MRR - calculations will be incorrect by 0-20% 
  6. 📉 At the end of the day all our marketing dashboards are telling us that we are going to get more money than we are, and we can’t tell by how much 😥


KEEPING TRACK OF VAT VALUES INTERNALLY 📊


You mentioned that one of the things to figure out would be how to keep the tax rates up to date. To be honest, even if those numbers were updated just once a year, the feature would be super helpful. I.e. it would mean overestimates by 0-5% overall vs 10-20%. 

Even with infrequent updates, the overestimate would be within an acceptable range - it doesn’t really need to be 100% up to date at al times. 


I also thought of some other ways to keep an internal table of VAT rates up to date that I thought I’d share:

 

1. SCRAPE THE IAP PROCEEDS CHART: Apple shows the proceeds after VAT and commission on iTunes connect when  you look at an IAP's price
A scraper could periodically extract and process this information per territory: https://i.imgur.com/Cdf3W0y.png

 

2. APPLE EMAIL ALERT + MANUAL UPDATE: Another option is to update the table manually whenever Apple sends out a notice that VAT rates are changing: 
https://developer.apple.com/news/?id=100002441

They send an email out to developers whenever a country’s VAT rate changes, and an email alert can be set up which leads to a manual update in the table. 


I’d imagine that more and more developers will be using revenuecat primarily for your awesome 3rd party integrations, and making proceeds match (or be closer) to the Apple’s would make it that much more useful! Hope you guys can add this soon 🙏

 

Hello there,

I think this feature is must have! We have been sending our events manually to appsflyer and mixpanel and we have deducted first Country VAT and then store cut. We have one .csv document with the percentages that we are editing from time to time.

It’s better to have anything than nothing at all, even you give us an option to set % for deduction for all users it will be enough for the beginning.

As well the second feature we are missing is that to choose in which currency revenue are reported to 3rd party integrations, to appsflyer it is not a problem since they can convert USD to EUR currency, but for mixpanel it is a problem. Google and Apple pays us in the EUR currency and we have setup all our analytics to display in EUR.

We are migrating our mobile game to revenuecat next week, and i am so excited about it :) If you guys just add those two features i will never think about those iap problems with unity and analytics again.

Cheers,
Goran

Badge +1

Jesus christ, we have spent 2 months integrating our whole ecosystem with RevenueCat to now finally on production test, finding out that it does not take tax into account.

 

This is a show-stopper and an embarrassment that you think that this had lower priority than other features.

 

What can be higher priority than making sure a 20% of all profits doesn’t get wrongly distributed!? 

Badge +3

Found out today that this was added! Thank you for adding this! 🙌

Not sure when it was added, perhaps a page with on the RC website with all the recent updates would be helpful. I dont think this was included in the monthly updates email (or perhaps I missed it). 

 

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