Loke Uei, senior technical product manager for Windows Mobile, recently told developers that, while "99 cents is interesting," "your app is worth more than that." He made the comments at developer sessions currently being conducted in Redmond, Wash., in advance of Microsoft's launch of Windows Marketplace for Mobile.

Better Than 'A Dollar Store'

"We would definitely want to promote that you make more money selling applications than selling your application in a dollar store," he told developers, according to news media.

Research in Motion's BlackBerry App World has set the first price above free as $2.99. Palm's App Catalog and Google's Android Market are also planning to set app prices higher than 99 cents.

Late last year, an open letter to Apple CEO Steve Jobs by an iPhone developer received a great deal of attention on the Web, highlighting the argument that Apple's App Store prices apps too low to allow professional-level software development.

Craig Hockenberry, a principal at Greensboro, N.C.-based IconFactory, posted the open letter on his blog, furbo.org. "As an iPhone developer who's been in the App Store since its launch," he wrote, "I'm starting to see a trend that concerns me." This trend, he wrote, is that "developers are lowering prices to the lowest possible level in order to get placement on iTunes," and the "proliferation of 99-cent 'ringtone apps'" is affecting product development.

'Limited Life Span and Broad Appeal'

Hockenberry noted that his company released a game and a Twitter add-on for the App Store, and they received a fair amount of recognition and popularity. But the problem, he wrote, is funding the development of more substantial products. Instead of working on "cooler (and more complex) ideas," he wrote, which require more development time, they're working on 99-cent titles "that have a limited life span and broad appeal."

Bigger projects, he wrote, can take up to nine months, costing up to $225,000 and requiring sales of more than 300,000 units at the 99-cent rate. "Unless you have a white-hot title, selling 10-15k units a day for a few weeks isn't going to happen," he said. But raising prices means the product won't reach the top of the App Store charts, Hockenberry added, and things will become even harder as the number of apps in the store grows.

Hockenberry has pointed out that one basic issue is how users of Apple's platform are assessing whether to buy new apps. He noted that it appears that "people are buying our products sight unseen," with only a screenshot to evaluate a product. Under those conditions, he said, users are willing to lose a dollar on an app they're trying out for the first time, but not more.

Avi Greengart, an analyst with industry research firm Current Analysis, agreed that "app pricing is definitely an issue" for developers, although he noted that it is "less of an issue" for platform vendors, who love offering the budget-friendly price of 99 cents or free.

Greengart said he doesn't know if Apple will change its business model, but he "absolutely" expects the company to "tweak its promotional structure" so buyers can see something like "great apps over 99 cents."