The company operating on the $20/year model offers a very specific feature-product and that's basically the only thing they do. My goal is to have that be one of the features my company offers eventually and do this with a handful of complimentary feature-companies to build something more robust over time, the idea being that I charge something like $10+/month for a set of "premium features".
It seems to me that $20/year could be a good lowest tier price, especially for products targeting individual customers (as opposed to businesses). There are successful solo founder projects in that range (notably pinboard.in, $22/year).