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%
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.