Amazon steeply discounts a large chunk of its Appstore catalog (imagine: "our top 100-rated games are all 75% off!"). Some developers will probably win in this

Amazon steeply discounts a large chunk of its Appstore catalog (imagine: "our top 100-rated games are all 75% off!"). Some developers will probably win in this scenario, but some developers -- most likely, those near the bottom of the list -- will lose, not gaining enough sales to offset the loss in revenue per sale. Amazon benefits the most, because it captures all the customer goodwill generated by such a promotion. There might be some chance of Amazon doing something like this, but it is important to point out that even in this case the developers of those 100 apps will on average be making more money. Amazon is trying to optimize prices to maximize their own profit and in doing so they also increase it for the developer. Lets look at an example... Say that Amazon sells n copies of a game per day at the list price of $1. Then they make .3n dollars per day and the writer of the app makes .7n dollars. Now if they lower the price by 75% like the author suggests and sell m copies per day then the app writer makes .2m dollars and Amazon makes .05m dollars. Moneywise, this obviously only makes sense for Amazon to do if m > n6 because they would be losing money otherwise. If this condition is met then the app writer will make at least .2n6=1.2n that day and their profit increased by at least 71% if Amazon was smart about their decision. As long as Amazon changes a price such that it increases their own gain then it also increases the gain of the developer. In the price range from .2/.7=.286 to 1.0 of the list price this is trivially true because your profits are directly proportional to theirs in that range. In that case you have a minimum increase in profit of 0% but will likely see something higher. In the range from 0.0 to 0.2 of the list price Amazon is losing money to pay you so I'm assuming that this isn't going to happen. In the range of .2 through .286 things get a little more complicated. Look at this plot (http://www.wolframalpha.com/input/?i=Plot%5B100*%28%28.3%2F%28x-.2%29%29*.2-.7%29%2F.7%2C+{x%2C.20%2C.2%2F.7}%5D http://www.wolframalpha.com/input/?i=Plot%5B100*%28%28.3%2F%...) which shows the absolute minimum percent increase in profit that the developer sees compared to list price given that Amazon isn't losing money on the decision. If Amazon thinks that it's a good idea to sell your app for 78% off then you're probably about to start making a lot more money than you would otherwise. I understand that at first glance .2 of list price sounds scary, but as I've shown above the developer also makes an increased profit whenever Amazon does. This doesn't totally negate the proposition that Amazon might take a loss on your app to help sales elsewhere but they could just as easily take a loss elsewhere to help sales of your app. On average you'll still be making more money. I've assumed throughout this that Amazon knows how to adjust prices to maximize their own profits but I have a feeling that they're pretty good at this. They have a treasure trove of data on people's shopping habits that I can't even begin to comprehend and they're just trying to apply what they've learned to an app store. tl;dr: The pricing policy actually increases your profits compared to a .7/.3 split at list price as long as Amazon is acting in a way that increases their own profits. It sounds scary at first but it's actually pretty cool that you can have a company as experienced at this stuff as Amazon optimize the price of your app so that you make as much profit as possible.