I wonder how fast a good designer could bang out a favicon (given a source image)? My gut estimate is 30-60 minutes at a bare minimum. If so, they'd probably want to charge more than a few dollars. But that could be a fun side project for a designer. Set up a site and let people queue up requests, then when you get some time, just open up your backlog of favicon requests and churn them out for 10 bucks a pop.
I think it depends how many sites you own, if you only own one then you'll probably be prepared to part with a lot more than someone who manages a load of different sites. Anyone tackling this market should probably set up 2 sites offering the same service branded and priced accordingly.
Sure, my use-case is that I have a few toy side-project apps. Serious enough that I'll drop $15 for a .com domain and could part with $5 for a nice favicon, but not enough that I really care enough to spend $50 (since they don't make revenue).
It's a funny thought experiment. Some people want to only spend a few bucks. But whats the price not for the pixeling, but the time it took to learn color theory, illustration, composition, what makes a bad icon, etc.?
