Credit Card Processing: $0.25+2.9%
Bandwidth for downloading even the largest 99 Cent apps (2GB) using amazon S3 (or a smaller version multiple times):
So that's basically 60 cents in cost for certain apps to be downloaded in the worst case.
Honestly, looking at that, it somewhat looks like they should wipe out the Tier 1 price point. Then it would seem they'd break-even on every paid app download.
The purchase of a single 99 cent app likely costs apple money. The purchase of a free app does as well, but usually a much smaller amount (the cost for the download bandwidth).
1.99 is probably guaranteed profit. We work with some of the largest downloads in the store from what we can tell, and even at amazon s3 rates, a 1.99 sale should generate a few cents for app.