Digital technology provides a sort of conundrum for entrepreneurs trying to price their products. On the one hand, the very fact that it is digital makes the supply almost infinite and the transfer costs low. On the other hand, each copy of an application still has the same amount of value for each user.
Traditional methods would dictate a price that takes into account the effort used to make a product and the hopeful profit to be made based upon an assumed number of buyers. For example, pricing your application to return a decent hourly wage for the amount of work you put into developing it. Indeed, some developers have indicated they intend to use this method, or something like it, to value their products.
However, this method begins to have problems once a brand or application becomes popular, because it devalues a product the more it is bought. For example, if you predict your app is likely to sell a hundred thousand copies, and it took you 10 hours to build, a price of $5.00 will net you an hourly wage of $50,000 ($35,000 per hour after Apple’s cut). Obviously, that is not a normal hourly wage for a developer. But choosing an hourly wage within reason, say $200.00 per hour, would dictate a price of $.02.