If you're running a mobile game, you already know app store fees are steep. You can keep a lot more of your revenue by going direct-to-consumer (DTC) with a Merchant of Record, if it's done right. But hidden MoR fees can quietly erode your margins, sometimes costing more than the 30% you're trying to avoid.

The hidden fee problem

MoRs handle payments, taxes, fraud, and compliance, but many MoRs pass on other costs without making them clear. This is called a cost-plus pricing model, where the MoR charges their fee and also charges you for all the underlying fees associated with payment processing. 

That flat 5% rate you were quoted? It probably doesn’t include payment method fees, FX, or regional taxes. If those additional costs are being passed on, then you could be paying much more than expected.

Taking a closer look at cost-plus pricing

This model is widely used by most MoRs. You pay all underlying variable fees (payment processing fees, FX, dispute fees) plus a markup for the MoR’s service. For instance, your MoR might charge 5% on top of payment processing fees, but all in the fee comes out to being 8–20% or worse.

Let’s take a look at two different types of common payment scenarios to showcase how the cost-plus model varies from transaction to transaction, and illustrate the ultimate effective rate that you pay with MoRs using a cost-plus model.

As you can see, a Visa credit card payment in the US (assuming you’re working with a US-based MoR) ends up costing you 9.2% of the total purchase amount (you receive $36.30 of the $39.99). Let’s take a look at another transaction scenario at the same price point.

In this example, you’re effectively paying over 13% of the item price. International payments bring along higher fees and PayPal is a bit more expensive than the card networks.

And then there’s fraud-related costs

In a cost-plus model, you're responsible for chargeback and fraud dispute fees, often costing $15–30 per case. We didn’t include fraud considerations in the above illustrations, but these aren’t edge cases; they’re an added cost that quietly eats into your revenue.

Why cost-plus pricing hurts developers

It’s more expensive than you think: Costs can balloon to 20%+ once you factor in payment method fees, FX, and fraud disputes. Cost-saving is a primary benefit of DTC in the first place, so what’s the point if you end up paying just under what Apple and Google charge you for IAPs?

Costs are unpredictable: Your DTC costs (and thus margin) swings month to month depending on how players choose to pay, making it nearly impossible to forecast or scale confidently.

Payments optimization becomes your job: Cost-plus puts the burden on you to optimize payment methods, track performance, and control costs. This is hard work that most game teams aren’t equipped or simply don’t want to handle.

All costs, no control: Because chargeback and fraud fees are passed on to you, your MoR has no incentive to triage disputes thoughtfully. But despite incurring those costs, you have virtually no control over how those risk decisions are made. How is that fair?

Developer-centric pricing models

Unlike cost-plus, some pricing models are built to protect your margin and simplify your operations.

Flat, all-in rate

A single, all-inclusive percentage (typically under 10%) covers everything, regardless of how players pay. It’s easy to forecast, protects you from surprise fees, and puts responsibility for payment optimization and fraud management where it belongs: with the MoR.

Hybrid model

Combines a percentage fee with a small fixed charge (e.g., 5% + $0.30). It’s fair and sustainable for larger purchases, where the fixed fee is negligible. While not ideal for microtransactions, it still prevents runaway costs and keeps your margins more stable.

Seek transparency & audit your MoR regularly

Don’t assume a headline rate is the full story. Make sure to audit your MoR regularly, ideally once per quarter. Your MoR should give you access to detailed reporting, but if not, ask for itemized reports (including taxes, processing, FX). The more visibility you gain, the easier it is to understand where the money is going. If your provider pushes back on sharing that data, that’s a big red flag.

How to audit your current setup

If you already have a webshop for your game, take a close look at your MoR fees. Calculate your effective rate, the total fees taken out of your revenue each month divided by your gross revenue. If it’s noticeably higher than the rate you were quoted, hidden costs may be the culprit.

Take control of your DTC margins

Suspect you’re overpaying? Let Neon review your setup and show you how much more revenue you could keep. Even small fee cuts make a big impact at scale.

Book a no-strings-attached consultation with our DTC experts to figure out what pricing model is right for you. With the right approach, you can ditch app store fees and hidden MoR charges, keeping more for development, marketing, and delivering great player experiences.