I'm going to disagree on that. Free Market is not what is setting the price of those iphone games and at those prices the only people winning are Apple (not even the consumers) and eventually the bigger game industry. The indie game developer loses here. Let me layout my reasons carefully. There are the following aspects: Free Market does not set prices - anchors do , Price Wars are harmful to the small producer and price wars stifle innovation.

Two things I think have led to the current state of the iphone app market. precedent of itunes 99cents music and the relatively low barrier of entry to a new market. This low barrier to entry and pricing model has now saturated the market and hyperincreased competition - hence minimized profit. Competition is good right? Well it depends who you ask. When it leads to price wars such that profit is marginal at best and only those companies which can leverage scale win it results in a non optimal result for most. All the small companies are forced to shut or are bought out leaving in place an oligopoly. End result bad for all but the big companies.

In addition because the companies are struggling they rush to release many low quality or uninnovative drivel. At those speeds and quantities price becomes the salient signal - it cant be helped. Companies can only compete on price with poor offerings. This ends up enforcing the signal of low price = crap even if this was not the case for all. Consumers suffer by getting trivial ports by big companies and catch the fish and other glorified demos from the supposed to be innovative indie.

Free Market does not set prices - anchors do. How can people complain that a $2 game is expensive! Those prices points are completely arbitrary and do not in any way indicate value, which is decided almost randomly or by psychological manipulation [1]. The buyers on the app market were used to the itune prices (which Apple used as a loss leader) and so used that as an anchor for the similar app market. Now the App developers had an opportunity to differentiate themselves and set a new anchor (e.g. see Starbucks brand for an excellent example) but did not. So just as in web 2.0 and the dot com boom, the current mobile explosion is getting lots of users - at the expense of a viable business model - they are unable to produce sufficient revenue. The smart ones are persuing alternative models. Micropayments or partenerships (shazam is free but hemoraging money but is now try bundling deals with operators and manufacturers)

But you do not have to fall for the same trap. As stated, pricing is subconsciously a signal for quality. If you have something good and its too cheap people assume it is crap. Hence if there was a movement to differentiate certain apps/games as classy and innovative and worth the price - setting a new anchor then the small companies need not be out competed by the large on price.

In particular to your case, you serve a niche area and are offering something new and posses an IP with high barrier costs. However people dont know what it is useful for or if it can actually perform. You must convince them of its value rather than reinforcing a lack by underpricing. Rather than risking your company by choosing the easy route and going for a marginal to lossy price and trying to compensate on volume you aught to, in my opinion, price higher - appropriately.

Price at a point where you dont need too much volume but cheap enough to capture a decent userbase. As well, Display its use cases and overall cost saving benefits. Convince these people who are actively overspending due to an aggresive market how you can help reduce that or produce more value for them. Market your product. Produce a killer app for it demonstrating its usefulness. But above all dont undervalue it.

Those are my .99 cents. I apologizing for going on so.

Oh yes and you need not only have one license. Have one aimed at start ups, another aimed at medium sized indie and another for large companies, for example. If you have demonstrated a good use case of your technology and marketed it well this partitioning should help boost overall sales.