Real total cost comparison: Stripe vs Paddle vs Lemon Squeezy for SaaS. Tax compliance, fees, and which platform makes sense at each revenue stage.
Choosing the best billing platform for SaaS in 2025 seems straightforward until you're actually making the decision. Then you realize Stripe's "simplicity" means building tax compliance yourself, while Paddle's higher fees include services that would cost more separately.
The right platform depends entirely on your revenue stage, technical resources, and where your customers live. Here's what the Stripe vs Paddle vs Lemon Squeezy decision actually looks like at different stages.
- Under $50k MRR: Lemon Squeezy — Lowest total cost (5% + 50¢), fastest setup (8-15 hours), automatic tax handling
- $50k-$100k MRR: Paddle — Proven scale, better support than Lemon Squeezy, handles complexity well
- $100k+ MRR: Stripe — Negotiate better rates (below 2.9%), maximum customization, worth building tax infrastructure
Key consideration: Merchant-of-record platforms (Paddle, Lemon Squeezy) save $5k-15k annually in tax software and compliance costs, making them cheaper below $100k MRR despite higher transaction fees.
The Core Difference
These aren't just payment processors with different UIs. Fundamentally different business models.
Stripe: You're the merchant of record. You handle all tax and compliance.
Paddle and Lemon Squeezy: They're the merchant of record. They handle tax and compliance for you.
This drives everything: pricing, features, implementation time, ongoing burden.
Total Costs at Different Revenue Stages
Marketing pages show base rates. Here's what you actually pay including all required services.
| Monthly MRR | Stripe (All-In) | Paddle | Lemon Squeezy |
|---|
| $5k | $490 (9.8%) | $275 (5.5%) | $275 (5.5%) |
| $10k | $820 (8.2%) | $525 (5.25%) | $525 (5.25%) |
| $25k | $1,750 (7%) | $1,300 (5.2%) | $1,300 (5.2%) |
| $50k | $3,200 (6.4%) | $2,550 (5.1%) | $2,550 (5.1%) |
| $100k | $5,900 (5.9%) | $5,050 (5.05%) | $5,050 (5.05%) |
Stripe all-in includes transaction fees (2.9% + 30¢), tax software ($50-500/month), failed payment tools ($200-500/month), and accounting help. Paddle and Lemon Squeezy include everything in one fee (5% + 50¢ per transaction).
Stripe becomes competitive above $100k MRR when you negotiate rates and build tax infrastructure. Below that, merchant-of-record platforms are cheaper.
What Tax Compliance Actually Costs
Most founders don't realize what "you handle tax" means with Stripe.
You need software: TaxJar, Quaderno, or Avalara. $50-500/month depending on features and filing automation.
You need registration: every US state where you have customers, EU VAT MOSS, Canadian GST, Australian GST. Each requires paperwork and ongoing compliance.
Monthly work: reconcile taxes, file returns, remit payments. Minimum 3-5 hours monthly, more during filing periods.
When mistakes happen—wrong rate applied, late filing, missing registration—there are penalties, back-taxes, and interest.
Total annual cost: $5,000-15,000 in software, accounting, and time.
Paddle and Lemon Squeezy: $0. They calculate, collect, file, remit everything. You do nothing.
For companies under $50k MRR, this alone justifies the fee difference.
Feature Comparison
Stripe has more features. Question: do you need them?
| Feature | Stripe | Paddle | Lemon Squeezy |
|---|
| Standard subscriptions | Excellent | Good | Good |
| Usage-based billing | Excellent (most flexible) | Good (comprehensive) | Good (simple implementation) |
| Tax handling | Manual (requires software) | Automatic (full MoR) | Automatic (full MoR) |
| API quality | Exceptional | Adequate | Modern |
| Setup time | 40-80 hours | 15-30 hours | 8-15 hours |
| Best for | $100k+ MRR, complex needs | $50k-$100k MRR, global scale | Under $50k MRR, speed to market |
All three platforms now support usage-based billing. Stripe remains most flexible with complex proration scenarios and real-time metering. Paddle offers comprehensive subscription management tools with flexible pricing plans and churn reduction strategies—more than adequate for most SaaS needs.
Lemon Squeezy's pricing capabilities are more sophisticated than most realize. Beyond basic metered billing, they offer volume pricing, graduated pricing, and package pricing at the variant level. Volume pricing charges a fixed per-unit cost based on usage tiers. Graduated pricing varies unit prices across tiers (like $3 for first 50 units, $2 for next 50, $1 thereafter). Package pricing sells fixed unit bundles.
The usage-based billing works retrospectively—customers get charged based on actual usage at renewal, with multiple aggregation methods. You can even add flat fees to pricing tiers and one-time setup charges to subscriptions.
The real difference: Stripe requires you to build more infrastructure around billing logic. Paddle and Lemon Squeezy provide opinionated, simpler implementations that work well for most usage scenarios. Lemon Squeezy's limitation isn't features—it's scale testing. Stripe has handled billions in volume; Lemon Squeezy's track record is shorter.
Paddle and Lemon Squeezy win decisively on tax and implementation speed. Dramatically less code required, tax just works, faster to production.
Developer Experience
I've integrated all three multiple times.
Stripe: API is exceptional. Documentation comprehensive. Testing sandbox perfect. Massive community—Stack Overflow has every answer.
Tradeoff: complexity. Complete control means you make all decisions. Proration logic, failed payments, downgrade handling—you build it all.
Integration time: 40-80 hours for production quality.
Paddle: API feels dated. Verbose, some features need support tickets. Documentation adequate. Smaller community.
Tradeoff: simplicity. Fewer decisions. Tax works. Failed payments automatic. Less code because they handle more.
Integration time: 15-30 hours.
Lemon Squeezy: Modern API design. Excellent docs. Good testing environment.
Tradeoff: less proven at extreme scale. Newer platform with shorter track record than Stripe's 13+ years. Smaller community means fewer Stack Overflow answers when stuck.
Integration time: 8-15 hours.
When Each Makes Sense
Choose Lemon Squeezy under $50k MRR with standard subscriptions. Fastest setup, tax handled, lowest all-in cost.
Choose Paddle for established merchant-of-record platform, proven scale, global customers, want tax completely removed.
Choose Stripe above $100k MRR (negotiate better rates), need usage-based billing, have engineering for tax, require maximum customization.
Migration Reality
Switching later is painful. 4-8 weeks engineering time, customer communication, revenue risk.
Multiple companies migrated. None said it was worth it afterward.
Justified migrations: Need usage billing (must move to Stripe). Tax became overwhelming (move to Paddle/Lemon Squeezy). Past $100k with better Stripe rates.
Not justified: "Fees seem high" (tax costs offset). "Don't like UI" (rarely use it). "Want better API" (not worth 60-120 hour migration).
Choose carefully upfront.
What Changed My Thinking
Used to default to Stripe. It's "professional," great API, what successful companies use.
After watching solo founders spend 60 hours building tax compliance they shouldn't think about, my recommendation changed.
One founder chose Stripe, spent six weeks on billing infrastructure, launched two months late due to tax registration. Competitor launched with Lemon Squeezy in three days, captured early market.
Advanced features look essential in planning. In practice, 80% of SaaS need: monthly/annual subscriptions, simple upgrades, tax handled. Lemon Squeezy and Paddle deliver this in hours versus Stripe's weeks.
Real Migration Stories
An IndieHackers founder shared their experience after six months with Lemon Squeezy: 200 paying customers, then unexpected cart recovery fees, payout fees adding up, technical issues with payouts moving to next month, checkout failures. They switched to Paddle. "Quick onboarding, responsive support, everything just works."
Contrast with Ashley Allen, who generated $19k selling an ebook through Lemon Squeezy: "The entire process has been seamless. I haven't had to stress about digital sales tax, receipts, and refunds."
The difference? Scale and complexity. Lemon Squeezy works brilliantly for straightforward use cases. Add volume, multiple products, complex workflows—cracks appear. Paddle handles complexity better but costs more. Stripe gives complete control but demands engineering time.
Migration between platforms isn't simple. Customer payment data can't transfer due to compliance restrictions—subscribers must re-enter billing details. Plan to run both systems temporarily, prompt customers to switch, accept some won't.
My take: Choose based on today's needs, not theoretical future requirements. Start simple. Add complexity when actually required. You can migrate later—painful but possible.
For most under $50k MRR, merchant-of-record platforms let you focus on product instead of tax compliance. Worth the transaction fee difference.
Frequently Asked Questions
Which billing platform is cheapest for SaaS?
Lemon Squeezy and Paddle both charge 5% + 50¢ per transaction, making them cheaper than Stripe's all-in cost (which includes 2.9% + 30¢ plus $50-500/month in tax software) for companies under $100k MRR. Stripe becomes more cost-effective above $100k when you negotiate volume discounts.
Do I need Stripe if I'm under $50k MRR?
No. For companies under $50k MRR, Lemon Squeezy or Paddle are typically better choices. They handle tax compliance automatically (saving $5k-15k annually), require less engineering time (8-30 hours vs 40-80 hours), and have lower all-in costs. Choose Stripe only if you need advanced features like complex proration or have engineering resources dedicated to billing.
Can I switch billing platforms later?
Yes, but it's painful. Migration takes 4-8 weeks of engineering time, and customers must re-enter payment details due to compliance restrictions. You'll need to run both systems temporarily and accept some subscriber drop-off. Only justified if you need features your current platform can't provide or you've outgrown pricing (past $100k with better Stripe rates available).