@Jeffro - like I say, pricing is tricky, it's impossible to guess how things will turn out exactly but there are some patterns that generally apply. One is that lower pricing tends to increase the number of people who will go ahead and buy a product. Dropping your price by 20% might increases unit sales by 30%.

As we all know, in the case of physical goods there are material, transport and labor costs etc associated with each unit produced, so, there's a hard limit to how far you can discount and that 30% increase might not actually result in a profit when you take into account the 20% increase in costs.

In the case of downloadable software, however, the per unit cost above your initial investment is almost zero, so, the 30% increase would definitely translate into higher profits. There is also the momentum effect as more sites use your software and word spreads virally.

You, Jeff, would pay $25 per year for AEC but, don't forget, you are a longtime user who was introduced to it as a free plugin, you were already familiar with it, it was already a feature of your site. Your busy site has lots of comments, it is a commercial enterprise and you are a rich Westerner for whom there is not all that much difference between $10 and $25 - I have heard that the average American spends that much on potato chips everyday. The vast majority of WP users have never installed AEC, cannot be as certain of its value, do not make money from their sites and are not as rich as you.

So, dramatically more people would pay $10 than would pay $25, and each use of AEC raises its profile and causes a ripple effect. For AEC, momentum and making more money overall are more important than squeezing as much as they can out of one specific user.

You say that the people who have paid $199 for GravityForms are happy with their purchase but, if you think about it, that statement is misleading: you cannot deduce that something is priced correctly simply because the customers who have decided to buy it are happy with the price they paid because, obviously, each one of them weighed up the pros and cons before buying and, in each case, came to the conclusion, beforehand, that it was worth $199. That is not a valid sample group, what about all the people went through the same decision process and concluded that it would NOT worth $199 to them?

Again, I would argue that the potential market for paid WordPress plugins extends well beyond rich Westerners and professional designers. The newly emergent paid plugins market should take a clue from the blockbuster success of the Apple's Appstore and price at the impulse level of $10 or lower for individual licenses and $100 or lower for dev licenses, and substantially less for less substantial plugins.

I may be wrong, none of us will know until it is tried, but if these companies want to unlock the greater market and convert users who are accustomed to free plugins to the idea of paying for them, they need to think big and price small.