What are typical usage and pricing trends for an iPhone app?

Andrew Chen pointed out an awesome iPhone presentation by Pinch Media, which covers some really useful insights you should use if considering whether to make your app free or paid, as well as whether your app is doing well when compared to other apps. Here are some of the key points.

Whether you have a free or paid iPhone application, the users returning falls off exponentially. If you retain more than 5% of users after 60 days, you’re doing really well. Long term retention is about 1%; this is true for both paid and free applications.

You shouldn’t necessarily give away your application for free and make your money on advertising. Because current CPMs are around $2.00 and applications are usually run 12 times at most, you may be better off just charging $0.99 for an application. Charge first, and adjust as you see a trend (high usage per user, target demographic, or lots of users) indicating advertising makes you more money.