Two huge disclaimers:

1. It’s early. iPhone 2.0 and the App Store are just hours old. Everything below is pure conjecture.
2. “A living” is subjective.

Where’s the market?

Pinch Media just released an initial price distribution chart for the initial 500 or so iPhone apps in the App Store.

There are always going to be lots of free apps, but what’s telling is the initial distribution of prices. Most are $10 or less with the bulk at under $5. If that’s where the market settles out, developers who planned on making a living selling iPhone software may be in for market whiplash.

It is certainly possible to make money selling software at $5 or $10 a pop, but you have to do significant volume to make it pay. $20-$49/pop can add up pretty quickly (as many successful shareware authors can attest to), but $5-$10/pop requires real volume.

OmniFocus Outlier

So far OmiFocus is the only app priced higher than $10 in the top 35 downloaded iPhone apps. There are only four other apps in the top 100 that are priced at higher than $9.99.

However, a closer look at OmniFocus shows that the entry price for the desktop app is already $79 so their customers are used to paying higher prices for their software. It will be very interesting to see how many new players without established products will be able to command prices over $9.99. I suspect there may be some seriously vertical apps (like ForeFlight that will command top dollar.

Are iPhone apps just supporting cast members?

It’s way too early to tell, but besides games, might the big winners be the hybridizers? makes their money selling web-based software — the iPhone app is just a gateway to their core service. OmniFocus will make the bulk of their money on their desktop app. Will iPhone-only developers build profitable companies or will a combination strategy (web, desktop, or both) be required to justify developing for the platform?

Of course an ad supported model is a possibility too. Twitterific, for example, already runs ads from The Deck (or you can pay $10-15 to get rid of the ads).

Another option is the Tap Tap Tap model which is to release a pile of apps for $2.99 each and make the dollars on aggregate volume.

Time will tell

I’m bullish on the iPhone and App Store. I still believe the iTouch platform will ultimately dominate the mobile space for the next 20 years. The next 3 months should set the market for iPhone app prices. I wonder where it will all settle out and where people’s pricing expectations will settle in.