Semi Secret Software's Adam "Atomic" Saltsman, the developer behind one-button hit Canabalt (now available for iPhone for $2.99), posted an informative essay on his Gamasutra blog about the App Store's "99¢ Problem", arguing that in some cases, pricing your game at a buck is "far more risky" than charging $1.99 or more for it.

He presents a sample outline for a three-person, eight-week project (totaling to 24 weeks/six months). In a best case scenario with all the developers requiring around $5,000 per month for living expenses before taxes, he estimates the iPhone game would "need to recoup about $30,000 in net revenue just to break even, much less earn a little extra to put toward the next project."

Saltsman compares that against the three bottom pricing tiers with a very optimistic prediction of 50,000 copies sold in the first two months, taking Apple's 30% cut into account:

  • 50,000 copies x $0.99 = $49,999 - 30% = $35,000
  • 50,000 copies x $1.99 = $99,500 - 30% = $70,000
  • 50,000 copies x $2.99 = $149,500 - 30% = $105,000

He explains that with this scenario, selling your game for only 99¢ would mean it would have to jump to the App Store's top ten downloads to make its development worth your while. Selling it for $1.99, however, means you can get into the top 100 and still make enough to get by or even to fund your next project:

"Lest I somehow forget to belabor this point even more, the situation I'm talking about here is not a worst case scenario, or even a likely scenario; this is a best-case, just shy of winning the lottery situation. 99.95% of developers never do this well on the app store (top 50 or thereabouts), much less breaking out into the top 10. And I cut so many corners figuring out that $30,000 number that it's not even funny. A little bit of feature creep, a little bit of health insurance, and that could very easily be $50,000 or $60,000 if not more.

But...what if you have a good idea? A great idea? The best idea of the year? If you think you have made something that is so hopelessly compelling, so brutally addictive that it can't help but succeed, yes, I believe the only way you can reach the top 10 in the app store is by selling it for a dollar. I can't and won't dispute that.

You have to keep in mind, though, that as the sales scale up exponentially on that ranking chart (which is why you want to be in the top 10 in the first place) the competition scales up as well. Getting into the top 100, or the top 50, you don't have to beat Flight Control or Hook Champ or Fieldrunners or any of those great games."

You can read the full essay on Saltsman's Gamasutra blog.