I’ve seen a lot of discussion recently about application development for the iPhone and iPod touch platforms, and in particular whether the current trend for very low cost apps is sustainable long term.

The first article I read was Andy Finnell’s How to Price Your iPhone App out of Existence. My own experiences with the app store were pretty consistent with his observations, but it got me thinking a bit more about this issue.

VentureBeat also noted that the $0.99 price is going to make it next to impossible to live off of an application, and they’re suggesting that the price is tending back up towards $9.99. Driven in that direction not by consumers (obviously), but by the developers coming to the realisation that they can’t afford to write high quality applications at the lower price points.

It is true that software for other platforms, even for mobile ones like Nokia’s S60 or PalmOS, is more expensive (10-15 times more expensive). And I’m sure it sells less too, but it must support its developer community otherwise they would have long since disappeared. But are they the same types of application? Is there a Koi Pond (or equivalent) for those platforms?

Here’s a thought though: the app store is co-mingling products of different types, and that is the cause of the pressure to reduce the prices. There are really applets, like my own Starbucks card balance checker, which can be written relatively quickly and while they are exceptionally useful on a mobile device, they’re not really applications you’ll be spending a lot of time with.

Applications, like iNewz, on the other hand cost a lot more to develop, but they’re going to be used more than an applet. I check my Starbucks balance at most two or three times a week, and it takes maybe 30 seconds each time. But, I spend 30 minutes reading the news on the bus each morning. Less than 2 minutes a week compared to 150 minutes.

In ‘Turning Ideas Into iPhone Applications‘ on O’Reilly blogs, Raven Zachary estimates at least $30,000 (and comments added to the post suggest that is low). And then there is ongoing support and addition of new features (which, as several have noted, your early adopters pick up for free today). Developing and maintaining a full-featured application is much more costly, so why shouldn’t we expect these to sell for $9.99 instead of $0.99?

But consumers don’t expect that, partly because they see all these applets in there for $0.99 or $1.99 and assume anything higher is simply over priced, and partly because many iPhone users are coming to the device from ‘feature’ phones like the RAZR, and are looking for applets more than applications still.

An orthogonal slice through the app store might help here: separating the store into simple applets and full featured applications. That sets consumer expectations a little better, and it might also help remove the pricing pressure that the applets currently apply on full-featured applications. And this goes across the board. A similar split in the games category would probably help differentiate games that might command $20 or more on other mobile gaming platforms, from the simpler (but still entertaining) puzzles and things like the Koi Pond. Both groups have their place in the ecosystem, but they need some separation to make it clear which category they’re in.

By the way, if you’re looking for more numbers on iPhone sales, check out Andy’s earlier post: Can you make a living off an iPhone app?. At the time of writing, the median sales per day is 49 copies. At $0.70 per copy to the developer, you’re earning $12K/year. Not bad for a hobby, but hardly a career.