Disclosure: I build and price digital products of my own and I ran exactly this arithmetic to pick my own checkout, so I am not a disinterested observer. There are no affiliate links on this page and I am not paid by any of these four. Second disclosure, on pricing: every platform below changes its fees. The rates in the table are the published rates at the time of writing and they are shown so the arithmetic is checkable, not because they are permanent. Recompute with the current numbers from each vendor's own pricing page before you make a decision worth money.
The only formula you need
Every one of these platforms reduces to the same shape: a percentage of the sale, plus a fixed amount per transaction, plus in some cases a separate payment-processor fee and a monthly plan fee. Write it once and the comparison stops being about marketing copy.
net_per_sale = price
- (price x platform_rate)
- platform_fixed_fee
- (price x processor_rate + processor_fixed) # only if you bring your own processor
- listing_fee # marketplaces only
monthly_net = (net_per_sale x units) - monthly_plan_fee
The second line is what catches people. A plan that advertises a 0% platform fee still charges you Stripe's rate underneath, and a plan with a monthly fee only wins above a certain unit volume. That break-even is a division, not an opinion:
break_even_units = monthly_plan_fee / (fee_saved_per_sale)
# illustration only, using an assumed $29/mo plan that removes
# an assumed 5% platform fee on a $39 product:
# fee saved per sale = 0.05 x 39 = $1.95
# break_even_units = 29 / 1.95 = 14.9 -> ~15 sales a month
Below fifteen sales a month in that illustration, the free plan wins. Above it, the paid plan does. If you do not yet know which side of that line you are on, you are on the free side, because you have not sold anything yet.
The fee structures, side by side
Read this as the shape of each model rather than as four permanent numbers.
| Lemon Squeezy | Gumroad | Payhip | Etsy |
|---|
| Model | Merchant of record | Merchant of record | Software plus your own processor | Marketplace |
| Published rate at time of writing | 5% + $0.50 per transaction, with surcharges for international cards and subscription renewals | 10% flat per sale, payment processing included | 5% on the free plan, lower or zero on paid monthly plans | $0.20 listing fee, 6.5% transaction fee, plus payment processing (roughly 3% + $0.25 in the US, varies by country) |
| Payment processing | Included in the rate | Included in the rate | Charged separately by Stripe or PayPal, on top | Etsy Payments, rate varies by country |
| Monthly plan fee | None | None | Optional, and the only way to reach the lowest rate | None, but ads and listing renewals recur |
| Who is the seller of record | The platform | The platform | Mostly you | The marketplace for tax collection |
| Sales tax / VAT handling | Handled for you, including EU VAT and US sales tax | Handled for you | Handles EU VAT on digital goods; you remain responsible for the rest | Collects and remits as a marketplace facilitator in many jurisdictions |
| Built-in discovery | None | Some, via Gumroad Discover at a higher rate on those sales | None | Yes, this is the entire point |
| Where the money lands | Platform balance, paid out on a cadence | Platform balance, paid out on a cadence | Your own Stripe or PayPal account, directly | Etsy Payments balance, deposited on a schedule, reserves possible for new sellers |
| Offsite ads fee | n/a | n/a | n/a | 12 to 15% on attributed sales, and mandatory above a revenue threshold |
| Best for | Anyone selling to customers outside their own country | Speed to first sale with the least setup | Keeping the most per sale once volume is real | Products that get found by search rather than by your audience |
The same $39 product, four times
Using the published rates above on a single $39 download, with no discount and a US card. The point of this table is the spread, not the decimals.
| Platform | Fees on a $39 sale | You keep | Effective take rate |
|---|
| Lemon Squeezy | 5% ($1.95) + $0.50 | $36.55 | 6.3% |
| Payhip, paid plan at 0% platform fee | Stripe only: 2.9% ($1.13) + $0.30 | $37.57 before the monthly plan fee | 3.7% plus the plan |
| Payhip, free plan | 5% ($1.95) + Stripe 2.9% ($1.13) + $0.30 | $35.62 | 8.7% |
| Gumroad | 10% ($3.90), processing included | $35.10 | 10.0% |
| Etsy, organic sale | $0.20 listing + 6.5% ($2.54) + ~3% + $0.25 ($1.42) | $34.84 | 10.7% |
| Etsy, offsite-ads attributed sale at 15% | the above plus $5.85 | $28.99 | 25.7% |
Two things jump out. First, the headline percentages compress once you account for fixed fees and processing: a "5%" platform and a "10%" platform are 6.3% and 10.0% in practice on a $39 item, and the gap narrows further on cheaper products because the fixed fee dominates. On a $9 product, a $0.50 fixed fee is 5.6% by itself. Second, Payhip's paid plan looks best per sale and only actually is best once the monthly fee is amortised across enough units, which is the break-even division above.
Fixed fees punish cheap products. If you are selling something under about $15, run the arithmetic specifically at your price point rather than trusting a comparison done at $39, because the ranking can invert.
Merchant of record is the part nobody reads and everybody should
This is the single most consequential difference on the page and it has nothing to do with fees.
When a platform acts as merchant of record, it is legally the seller. It charges the customer, it determines the correct tax in the customer's jurisdiction, it collects that tax, and it files and remits it. Your relationship is with the platform, and you receive a payout rather than a customer payment. Lemon Squeezy and Gumroad both work this way.
When you bring your own Stripe account, you are the seller. You are responsible for working out whether you owe tax in the buyer's jurisdiction, registering where required, collecting the right rate, and filing. Payhip sits in the middle: it handles EU VAT on digital goods, which is the hardest single case, but you remain the seller for most other purposes.
Why this matters more than a few percentage points: EU VAT on digital services supplied to consumers applies from the first sale, with no small-seller registration threshold for suppliers established outside the EU. There is no "I'm too small for this to apply" tier. One person in Germany buying your $19 PDF creates an obligation. A merchant of record absorbs that entire problem, and the extra few percent it charges is, functionally, the price of not doing international tax compliance as a side project.
For a student selling a first product to an unpredictable international audience, that trade is usually correct. If your entire customer base is domestic and you already have an accountant, it is much less compelling.
Discovery: when is a marketplace worth the higher cut
Lemon Squeezy, Payhip, and to a large extent Gumroad are storefronts. They process a sale you brought. Nobody browses them looking for something to buy. Etsy is the opposite: it has search traffic, and people arrive with intent and no idea who you are. Gumroad Discover is a partial middle ground, surfacing products inside Gumroad at a higher fee on the sales it sources.
The question is never "is Etsy expensive", it is "does Etsy bring enough incremental sales to beat a cheaper channel I have to fill myself". That is another division:
extra_units_needed = (own_channel_net / marketplace_net) - 1
# organic Etsy sale vs Lemon Squeezy, at $39:
# 36.55 / 34.84 - 1 = 0.049 -> about 5% more units
# offsite-ads-attributed Etsy sale vs Lemon Squeezy:
# 36.55 / 28.99 - 1 = 0.261 -> about 26% more units
Five percent more sales is nothing. If Etsy's search sends you even a trickle of buyers you would never have reached, an organic Etsy sale beats a self-marketed one comfortably. Twenty-six percent is a different conversation, and offsite ads are not optional once you cross Etsy's revenue threshold. The honest framing: Etsy is not competing with Lemon Squeezy on fees, it is competing with the cost and time of your own marketing, and marketing is the expensive part of selling a digital product. If you have no audience, paying a marketplace for demand is rational. If you already have an audience, paying a marketplace for demand you already had is not.
Etsy also has category rules about what digital products it permits and how they are delivered, and those rules have changed more than once. Check the current policy for your specific product type before you build a listing strategy around it.
Payouts, which decide your cash flow
Three of these four hold your money and pay you on a cadence; one does not.
- Payhip is structurally the fastest, because the customer pays your Stripe or PayPal account directly. The money is yours immediately and lands on your processor's normal payout schedule. Nobody in the middle is holding a balance.
- Lemon Squeezy and Gumroad collect into a platform balance and pay out on a schedule, sometimes with a minimum balance and country restrictions on payout methods. That is an unavoidable consequence of merchant-of-record status, since they are the ones who received the customer's money.
- Etsy deposits on a schedule and can place new sellers on a payment reserve, holding a portion of sales for a period. Budget for that if you are counting on early revenue.
None of this matters at ten sales a month and all of it matters when you are trying to reinvest revenue on a two-week cycle.
Pick this one if
Pick Lemon Squeezy if
You are selling internationally and you do not want to think about VAT, ever. Merchant-of-record status plus a moderate rate makes it the default for a solo seller with a global audience, and the effective take rate on a mid-priced product is the lowest of the three non-marketplace options once processing is included.
Pick Gumroad if
You want to be selling within the hour and you value that above the fee. It is the fastest path from a finished PDF to a working checkout link, it is also merchant of record, and the flat rate means there is exactly one number to reason about. You are paying a premium for setup speed, which is a legitimate thing to buy when the alternative is not launching.
Pick Payhip if
You have real, predictable volume and you want to keep the most per sale. The catch is that you own the tax question outside EU digital VAT, so this is the choice for someone who has already decided how they handle sales tax, not the choice for someone hoping not to have to.
Pick Etsy if
Your product is something people search for rather than something you announce. The cut is the highest on the page and the offsite-ads fee makes it higher still, but you are buying demand, not payment processing, and demand is the thing that is actually hard.
Or list on more than one
Nothing stops you from listing the same file in several places, and the marginal cost of a second listing is an afternoon. The sensible pattern is one primary checkout you control and link to from your own site, plus a marketplace listing as a discovery channel. My own products live at the store with a single primary checkout, precisely because a link I control does not change its terms without telling me.
What this comparison deliberately does not tell you
It does not tell you which platform converts better, because I have no defensible data on that and neither does anyone quoting a conversion figure at you without naming the sample. It does not quote current prices as fact, because all four change them. And it does not account for the largest cost in selling a digital product, which is not the fee at all: it is the time spent making something people want and then telling them it exists. A three-percent fee difference on ten sales is a rounding error. The difference between a product that sells and one that does not is everything.
If you are pricing the product itself rather than the checkout, the arithmetic behind unit economics for physical goods is in the print-on-demand economics guide, and the same margin logic applies once you swap fulfilment cost for platform fee. If this is one of several spending decisions you are weighing at once, free vs paid for a CS student is the framework version, and the ready-made assets I use for launches are in templates.
Tools referenced in this guide
- Store — the digital products this arithmetic was run for, with a single primary checkout.
- Print-on-demand economics — the same margin arithmetic applied to physical goods, where fulfilment cost replaces platform fee.
- Templates — launch assets for the part that actually decides whether a product sells.