Cutting the price of your app could increase revenue significantly according to a January 2013 publication by Distimo App Analytics.
The report monitored 850 unique iPhone applications and 930 iPad applications throughout December, that had reached the Top 400 Overall on the iTunes app store.
The average price change across these apps was between $1 and $3 with price cuts having a far greater effect on the Apple App Store for iPhone with average downloads growing 1665% over a five-day period whereas app revenues on the Apple App Store for iPad increased by a mere 871%!
Developers were able to quickly notice the impact of their price cuts with increases visible after just three days in some cases and continuing for the duration of the sale period.
Revenue increases were attributed to both one-off fees and in-app purchases.
Furthermore, there was actually a negative effect felt at the conclusion of the sale with downloads dropping by -46% for iPhone apps and -57% for iPad apps (over an aggregated five day period) – customers obviously disappointed to miss out on the lower price or planning to wait for another sale event.
However the argument for dropping the price of your app appears to be far greater with cumulative growth in revenue of 159% show after 7 days with the surge of downloads compensating for the lower price charged during the sale period.