Put aside the debate about $0.99 vs $1.99 on the App Store for a minute. How about $109.99 vs. $199.99?!
There are currently 14 iPhone applications for sale on the US App Store for more than $100. While some of you may be aghast at this fact, considering that we've crossed the 10,000 app threshold, that's a very small percentage. None of these 14 are general purpose applications trying to appeal to a wide consumer market. These are applications with a small addressable market.
While most applications on the App Store reach for download numbers in excess of 100,000, highly specialized iPhone applications may only appeal to a few hundred people each. As a point of reference, a $109.99 iPhone application purchased by only 300 people will net the developer just over $23,000, perhaps less than the cost to develop it. This is a very different proposition than developing a broadly appealing game and hoping for one million (or even one hundred thousand) sales at $0.99 each.
I think it's great that the App Store model supports vertical and highly-specialized iPhone apps at price points over $100. It's good for the growth of the iPhone market. We benefit from the diversity, as much as people are quick to criticize anything over $9.99. Odds are, none of these 14 applications will appeal to you, but they will appeal to someone.
Thanks to AppSherpa for the ability to sort iPhone applications by price. You saved me hours of research.
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Ah, a point I forgot to make in this article...
As Apple does not provide the ability for software developers to purchase and distribute iPhone hardware as part of a software solution to customers (useful in the vertical apps market and done on other platforms), the process is that customers need to acquire hardware on their own and then buy the software on the App Store.
If Lextech Labs was selling a mobile device for monitoring CCTV feeds for security guards at the price of $1,100, we wouldn't blink at that price. Yet, with the hardware at $200, and the software at $900, some cry foul.
Another avenue some developers are going is licensing. In the home automation arena, there is no charge for the Iphone App to download, but a licensing fee of several hundred dollars to make the app work per device. It is a way for the manufacturers to not lose revenue from a $200 phone over a thousands of dollars for a touchscreen interface on the wall.
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