I'm confused. First you say that they have to pay developers but then you say that they are a small company.STOP WHINING ABOUT THE PRICE!!!!!!!!!
The reason why it's so expensive is due to the licensing for all the encryptions used in the app, which are not cheap, in addition to the size of the company, and the development time.
The main hurdle for all password app, like 1Password is the fact that most country has huge restrictions on export of cryptography, with United States being one of the strictest. Since Agilebits is a Canadian company, they are bound by Canadian export laws in terms of cryptography:
http://www.international.gc.ca/controls-controles/export-exportation/crypto/Crypto_Intro.aspx
Obtaining the permit for export in cryptography is not cheap. In fact, it's pretty expensive when you factor in lawyers, fees, etc. This also leads to development time for the app being increased, since there are waiting periods for obtaining the permit. This means you have to pay the developers more money for extra hours spent on making the app.
Add all those factors together, and making a very simple password app management app, such as 1Password suddenly becomes very expensive.
Size of the company also factors into the price. Agilebits is a small, indie software company. LastPass is very large company with multiple backing from several corporation. That's why they are able to offer the app for free, and AgileBits charging for higher price. In general practice, Indie software company tends to deliver higher quality product.
Maybe the problem is that their staff is too bloated? Maybe they did not take the time to figure out their business model properly? Why should I, as a Canadian pay for export fees to other countries? Shouldn't the price of the app differ per country?
I bought the desktop version and the iOS version but now they want me to pay again for another release? No.
I should have a right to complain about the price especially considering how much I paid previously.