Just prior to iPhone 3.0 there were rumors that Apple would introduce a Premium App Store which would let high quality apps in the $10 or $20+ range enjoy some breathing room away from the "race to the bottom" pressure of the current cheapy novelty app crowd. Why is this still a good idea? Well, AppCubby has run the numbers and it looks like $5 (down from $10) is the new ceiling for App Store apps:

With the average price in the App Store now at $1.39 for games and $2.58 for all apps, the App Store is killing the value perception of mobile software shoppers. Some would argue that this is just market economics at work, but I think there is a very strong case to be made for Apple being directly responsible for this trend. Whether they did so deliberately or inadvertently is still up for debate, but either way, the future of iPhone platform and of the entire mobile software industry hinges on the direction Apple takes with App Store 2.0. The downward spiral in app prices caused by the Top 100 list and Apple's relatively hands off approach during the first year of the App Store has created completely unrealistic pricing expectations that may haunt the entire mobile software industry for years to come.

The logic is this: if developers can't earn a fair living making great iPhone apps, they aren't going to make great iPhone apps. (Think about it, would you work day and night if you couldn't feed your family at the end of the week?)

Gizmodo adds in the gaming angle:

There's no easy solution to this, which means that iPhone users shouldn't expect much more complicated games than what's already on there now. All the talk of the iPhone competing with the DS or the PSP in terms of quality may be moot if there's nobody there to spend the effort developing that level of games.

We here at TiPb have long held that we don't mind paying higher prices for higher quality apps. Why? Because we want them, we love them, and are happy to support them so we get more and better for years to come. The iPhone itself isn't cheap and the idea that we can't afford $10 (or more) for an amazing new game or innovative new app is just ludicrous.

Apple mentioned on their Q3 2009 conference call yesterday that they had room to improve on the App Store. A Premium App Store (or App Store Plus, or whatever name it goes by), perhaps combined with Craig Hockenberry's idea of a premium developer membership, could be a great place to start.