I could go higher on the Upgrade price too (next round, of course). The discount given by JRiver is quite substantial, considering the low "original" price of the product. I'd say something more of a $7-10 discount from "retail" would be appropriate and acceptable.
I must say, though, I do agree on the whole $x.98/9 thing. Just call it what it is. This isn't gas we're buying here.
EDIT: I'd add that I also see this as appropriate because of the sheer quantity of work that is done on the product with each new major release. Anyone who wants to see the level of changes... Just reinstall MC11 for a minute and compare to what we have now with MC13. Now, roll back Photoshop from CS4 to CS2. Sure, there are differences in Photoshop (and CS4 is quite nice), but not too much I'd call revolutionary.
That, and the "total price" thing again... When you're looking at a $1800 software suite, I'd expect the upgrade pricing to be on the order of 50% off of list. When you're looking at a ~ $50 application, then the story is a bit different. Upgrade pricing of some kind certainly encourages additional sales and repeat business, so you don't want no discount. But I don't think you need to go 50%.