Pricing decisions for iPhone apps

Andy Finnell’s post about pricing of iPhone apps available now in the iTunes Store brings up quite a few issues not just about pricing, but also on known shortcomings of the iTunes Store that Apple should look into.

The problem that you’re likely to have, like most developers, is setting a price that you can live on. The temptation will be to price your app too low, such that developing the application isn’t sustainable. You might have the best of intentions, but in the end you’ll cause the premature death of your business before it even gets a chance. So why might you be tempted to price your iPhone application so low?

To be honest, as consumers, we will definitely prefer to see the continuity of the current pricing situations, aka more $0.99 apps. But as pointed out in Andy’s article, we’ll end up with many apps that stayed at version 1.0 with not much improvements or with developers dropping out of the market with the unsustainable pricing situation now.

Also with regards to the iTunes Store, with only two ways to sort through the apps in their respective categories, it will be difficult for developers to help push their apps to the top of the pile unless they price it attractively (either $0.99 or FREE) or they get the boost from advertising and marketing, which most of them won’t.

So which do you prefer? Should developers price their apps based on their value or keep as it is now and risk going into oblivion?