Which is better: Many customers at low price-point or few at high price?

eh, for me? I am type A mostly because I don't enjoy negotiation and hard sales. If you have an expensive product, at least in my sector, you are expected to negotiate, sometimes for months on price. Then you are expected to give a discount to the customers that waste the most of your time.

With low-value products? Here is the price. want it? If you want to change the price, sure, sometimes you need to do that, but you change it for everyone. (In fact, in the VPS sector, It is traditional to change the price for existing customers as well as new customers. Linode deserves some of the credit for making that traditional. In the co-lo or bandwidth business, where it's all negotiated? it's traditional to offer like 50% better deals to new customers and to squeeze your old customers until they leave, like it is in real-estate leases. I recently lowered the price on my low-end co-lo and gave the lower price to all my existing customers, to much surprise. )

Right now, I'm trying to move some products that are traditionally sold with lots of negotiation (Like co-location) into the "here is the price, you want it?" model, which is really in everyone's interest except the salesguy. And salesguys in this industry make a lot of money; two big local co-lo salesguys have contacted me; I know they are good, and that they can bring me customers, as I know a bunch of people that bought through them. The problem? they want 10% of the revenue from the customer for the life of the customer. 10% isn't far from my own target margin for co-lo, and some plans, I don't even make that much. And for the life of the customer? through any upgrades down the road? it seems like a bookkeeping nightmare.

The other advantage of having lots of small customers is that if someone wants something that you don't want to do? (in my case, for instance, people that want password auth to my infrastructure, or people that want to run windows) it's pretty easy for me to say "That's not what I do. Here is a refund; I hear that provider X can help you out" - whereas if that customer was 1/10th of my revenue? I'd be spending all night trying to get a microsoft system working, or cleaning up after a script kiddie broke into a weak password and got into the customer's management interface.

I'm not an expert in this topic, but I would say that the many customers at the low price-point are more important than the few high-price one. If you have only 5 high-price customers, which generate the most of your income and they decide to break up the business relations with you, than you have probably a big problem and loose a lot of money. So, I think it's better to have a lot of low price customers, because if some of them break up the business relations with you, then it doesn't matter that much. You have enough low-price customers left, which generate the most of your money and some high-price customers on the top of it, which generate a lot of money as well. So the risk to loose money is probably lower. SAP is a good example. They first produced products for the big and important companies, but they figured out that the middle-class customers generate a lot of money as well. I guess it can differ, but I think it's probably the better decision.

"In my experience, folks who pay A WHOLE NINETY NINE CENTS OF MY MONEY have very shockingly high expectations of polish / quality / feature selection (but no desire to e.g. read what the software actually does)"

What you do? You shut them out.

Not "remote disable them". But feature/support requests policy has to be simple. Either a user forum, FAQ, etc

You should absolutely not waste your precious time with this kind of work. If they want a refund just give it to them (not sure how easy this is on App Store or others)

Also, if this is so overwhelming, raise the price If they really want this so much they can pay 1.99

You don't need to ignore everything they say, but take it with a huge grain of salt.

If your product needs zero rework for each sale (and scales easily), many customers is the obvious way. If it requires a sales process (even if it's as simple as signing a contract), less customers (paying more) is the way.

Personally, I prefer the "less customers" approach. I find it much easier to pleas everyone and feel like I'm not "working for free" when "everyone" is a relativelly small group and the payback is still high

So why differentiate, other than with a value that clearly segments them?

This is not unlike Apple's laptop plan - before it was retired, the plastic unibody 13" macbook and 13" aluminum macbook pro had almost no distinctions to a consumer aside from exterior.