>1) People seem to balk at paying >$5 for a mobile or tablet game. (With some notable exceptions.)
2) The $0.99 or $1.99 price point is not financially viable for most games.
This sounds like: I want to sell for $5 but customers won't buy my product at that price.
Well, in that case your product, however much your toiled and however much you spend to make it, is not viable?
.. except is can be made viable by changing the charge structure; that's the whole point of IAP.
It defies simplistic supply-and-demand analysis because there is no longer just one price, but many; the customer has to make a constant series of decisions about the value of instant gratification. Some people hate this.
The problem with that logic, as much as I'd like to believe it, is that customers seem to be very happy to pay >5$ after "buying" the "free" game in IAP. And because "free"+IAP is the norm these days, customers scoff at expensive games. Why pay 5$ if you can get another one for "free"?
I'd much prefer the free demo + paid full version to be honest as I'd like to see if a game is worth it. If it is, I'm happy to pay a decent price. Then again, I might be a minority.
The marketplace isn't viable. Refunds aside, people aren't willing to spend that level of money on a mobile game when they don't know if it's going to be good or not (and many are not).
This sounds like: I want to sell for $5 but customers won't buy my product at that price.
Well, in that case your product, however much your toiled and however much you spend to make it, is not viable?