Long anticipated, Google today announced that Android will be accepting paid applications from developers:
Developers from these countries can go to the publisher website at http://market.android.com/publish to upload their application(s) along with end user pricing for the apps. Initially, priced applications will be available to end users in the US starting mid next week. We will add end user support for additional countries in the coming months.
We will also enable developers in Germany, Austria, Netherlands, France, and Spain to offer priced applications later this quarter. By the end of Q1 2009, we will announce support for developers in additional countries. Developers can find more information about priced applications in Android Market at http://market.android.com/support/
Google Checkout will serve as the payment and billing mechanism for Android Market. Developers who do not already have a Google Checkout merchant account can easily sign up for one via the publisher website.
Obviously the iPhone has had great success with its paid apps market and a number of developers have made some reasonable money. The "sweet spot" for paid apps in the iPhone market appears to be $.99 or $1.99, although there are quite a few apps that are more expensive.