Dropping the price of applications in the App Store can give a significant – if temporary – lift in revenue, according to Distimo.
The company’s new report, The Effect of Price Events, claims that revenue from an iPhone app on the App Store increases by around 95%, three days after its price is reduced. For iPad apps, the lift is a more modest 51%.
As you might expect, dropping the price of an app leads to a higher number of downloads: on average, cumulative downloads grow by 1665% five days after a price drop in the App Store for iPhone, while the growth is 871% on the iPad. When prices increase again, the volume of downloads drops.
Distimo says that the effect is similar for apps on Google Play, although not quite so significant.