SCE will decide the retail price based on the wholesale price the PSM Publisher set. For example, if the wholesale price is set at USD 0.69, SCE will set the retail price at about USD 0.99.
Games and applications distributed through the PlayStation®Store will be limited to paid (including freemium) content for the moment.
I got this straight from their site. Like I said you can get a Good game for free from the Google Playstore and iTunes, But SCE would charge for it. This is what I was trying to imply. And the ARM Cortex-A9 MPCore graphics on the Vita is said to support DirectX, OpenGL ES, OpenVG, and OpenCL which I don't think it's true but I might be wrong. But if it is couldn't you make a game based off their software and us PSM Studio to test it out on your Vita?
Sce will distribute free games, if that's what the publisher wants, but the publisher will need to pay Sony 1$ every time the game is "purchased", which is why all the free games have microtransactions. And that's the hard decision when programming on PSM... "Do I restrict content to make it free and force players buy add-on content to finance the game, or do I charge right off the bat and just keep them updated?"
During this inquiry, I contacted Sony directly, and got this reply:
Justin D wrote:Customer By Web Form - 05/02/2013 06:13 AM
Is it possible to change the price of a game? I was wondering if I could start off a Game at 1$ and use the sales to finance the development of the Online Gaming system for said Game, and then sell it for a higher price once complete. This would ultimately mean that the first players who bought the game (and supported me) would get updated at no extra charge, and new gamers would need to pay the revised price. Is this an option on PSN/PSM?
PlayStation(R)Mobile Developer Support <firstname.lastname@example.org> wrote:Response Via Email(PlayStation(R)Mobile Developer Support) - 05/10/2013 04:22 AM
Thank you for contacting us.
You can change the price of your game.
You can start off a game at $1 and then set the price of the next version at $1.5.
However, a player who already bought Version 1.0 should be able to update the game for free. There is no option to charge for an update to an existing version at the moment.
The publisher doesn't have to pay for those 'free' games, instead they're called freemium games, they have in app purchases because that's the way Sony (and thus the publisher) earns money from them, think of it like this, Sony isn't interested in your game until they can make a profit.