When the iPhone App Store launched last Friday along with the new 3G iPhone, free apps made up 24 percent of the 552 apps available. In other words, the most popular price point was free. The rest of the apps ranged in price from 99 cents to $9.99 and even more. Instead of dictating a uniform price, as he did with music, Steve Jobs let the market decide what price apps should go for.
The market is already doing that sorting. According to Greg Yardley at Pinch Media, as of this morning there were 798 iPhone apps available through the App Store on iTunes, and only 20 percent (161 apps) are free. The most popular price point is now 99 cents, with 24 percent (188 apps). The second most popular is $9.99 with 12 percent (96 apps, including Enigmo, an addictive puzzle game, and the handy GuitarToolkit). See the price distribution chart above.
All the other price points are shifting to either 99 cents or $9.99, implying that the sweet spot is 99 cents for most apps just as it is for songs. But with the caveat that if your app is good enough people will be price insensitive. Below is the price distribution of iPhone apps the day of launch, for comparison purposes.