Oy. Very smart people still banging the drum over pricing on the store... So the deal is: people will pay for quality. They will pay what they perceive is a "fair" price for said quality. I've studied the VHS and BetaMax battle, Mac vs. PC, and others. The lesson?
People aren't smart when it comes to buying things.
Sure, some people are very smart. Some do the research, check the reviews, wait it out, etc. But unless you've been under a rock the past 3 months, the average US customer is lured by big and shiny, not small but practical. Unfortunately, this isn't where the common sense comes in.
The other thing is that you have to understand: retailers (and these people have been in the game longer than ANY of us) fret about price points on an hourly basis. The "secret sauce" of any retail operation is where it prices merchandise and how that merchandise is packaged/presented to the customer.
The point, and the common sense part: if your app LOOKS like it SHOULD cost more money, people will buy it at that price. That's why there are free apps on the store people aren't downloading. They look like shit -- why bother? That's also why apps like Koi Pond sold so well; apps that look great will find an audience.
This is only hard for developers to understand because it's a new world. Yeah, if you've done shareware you know a little about pricing and whatnot, but you still won't come close to the skills of retailers. If you only recently got into the software-for-money game AND you have zero design skills, you're doubly screwed.
So quit bitching about it and learn. I know a bit about design, marketing, pricing, etc. but I'm learning to program the iPhone. Believe me, if this pre-calc failboy can do it, you can learn retail strategies.
one man's journey into creating gibblybits