In plain words
A subscription app fee is the charge a subscription platform makes for each order it handles. Beyond a monthly plan, many apps take a percentage of the order plus a few cents per transaction.
It is a variable cost that applies only to subscription orders, and it comes on top of the payment processor's fee. It is easy to leave out because it arrives on the app's invoice, far from the orders that caused it. Left out, every renewal looks a little better than it is.
Formula
- App fee per subscription order = order revenue × the app's rate + its fixed fee per order
Worked example
An app that charges 1% plus $0.19 takes $0.36 and $0.19 from each $36.00 renewal. The engine puts the renewal's margin at $11.13, where it was $11.68 without the fee.
On a one-time order of the same bag the engine charges $0.00: the fee is scoped to subscription orders.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| Cost of goods | per unit | −$12.00 |
| Pick and pack | per order | −$1.18 |
| Packaging | per parcel | −$0.50 |
| Shipping label | per parcel | −$7.50 |
| Card fee per order | per order | −$0.30 |
| Refunds | percent | −$2.00 |
| Card processing | percent | −$1.16 |
| Contribution margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
The app's fee is not the payment processing fee
The processor charges for taking the payment. The subscription app charges for scheduling and managing the order. A subscription order pays both. Assuming the app's fee is included in card fees leaves a cost out of every renewal.
Using it
Read your app's pricing for the per-order part and enter it as a cost on subscription orders. Multiply it by a year of renewals before you dismiss it as small. When you compare apps, compare what each costs at your order value and volume: a higher monthly plan with no per-order fee can be cheaper.
In Offer Suite
In Offer Suite a cost kind can be scoped to subscription orders only: every renewal, and any first order that holds a subscription line. One-time orders are never charged it.
Source: Offer Suite's margin engine and its cost scopes.