I have been thinking about this for some time now; I want to buy iPhone apps (Spore!) and I would like to turn my own programming projects into a business. After doing some research I found a site that sells mobile phone applications right now for Windows mobile and Blackberry. The site's name is Handango and you can buy programs on that service for as low as $7.99 to about $199 (ignoring developer packages). The existence of services like Handango proves that a market does exist even though I have a hard time contemplating spending $50, $30, or even $20 on the products I saw there.
The iPhone may well be different because the iPhone is a fun device that people just want to play with and the apps just look good. Plus, the iPhone will have its store in front of every iPhone user’s eyeballs. That is 5.7 million as of today and some people think that number will reach 14 million by the end of the year (arstechina). These numbers are compelling and developers only need to reach a small slice of this market to create a sustainable niche product.
So, I have been playing with numbers to see what a fair price would be for this type of product. The price point I think is the best bet is $4.99. Now, I am not involved in marketing so take it with a huge grain of salt; but, this price is low enough that as a consumer I wouldn’t spend much time worrying about the purchase decision.
I estimate that a developer will see about $2.49 of $4.99 after the Apple cut and taxes. So, if you can reach .5% of today’s iPhone market you would earn about $70,000 after taxes. Over the year, this amounts to about one person’s salary. In terms of units sold, you would need to sell 2,375 copies each month to be sustainable.
After considering all this, I think it is a safe bet that something will happen with the AppStore and independent developers could benefit. It will be interesting to see what happens over the next few months as this market develops.
Edit: Since last posting this I have found another blog post about iPhone pricing: http://www.marco.org/288. This developer things that $10-$15 is a better price range. We shall see what happens in June...
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