I'm also planning to release it on Steam, and it will be an upfront cost there.

Also after paying the 'remove ads' price, which will likely be cheaper than the price I'm planning to sell it for on Steam (thinking $2.99 for mobile right now), the game will effectively become the same as the Steam version anyway.

I agree that it sucks. I wish I could just put $2.99 as the price and it would still have a chance of selling decently. One of the iOS games I made a long time ago I did exactly that (actually I priced it at $1.99). But people were also willing to pay $1-2 for Angry Bird-style mobile games by the millions back then.

Now there are so many free games on there, they seem to just skip over to the next free game instead, and maybe pay to have ads removed (my own partner does this, bounce from free game to free game, and if she likes the game she pays to remove the ads).

Have you looked into distributing on Apple Arcade? I haven’t myself but it seems like it might be another potential source of income that doesn’t rely on ads/in-app purchases. I think Google Play has a similar game service?

From what I've heard, Apple Arcade won't even consider you for Apple Arcade unless you're already established and have made popular games in the past, and they're very selective even then. So there's probably no chance my game would be accepted for it.

This is one comment that corroborates that:

"It requires support for Mac OS and TV OS and committing to significant content updates every year for three years, at minimum. Revenue is based on how many people play your game compared to everything else on the platform.

Because of the contractual commitment and the need for marketing spend (If people don't play, you don't get paid), it's hard to recommend for a small developer without commercial experience, which is why Apple is rather particular about who they approve."[1]

[1]: https://www.reddit.com/r/gamedev/comments/dwwi87/experience_...