Google has reduced the minimum chargeable price for Android applications and in-app purchases in seventeen countries. While this should help developers, Google will be hoping that it will have a positive impact on its own advertising network.
Why would Google want to cut the minimum pricing for Android apps? The changes are not mandatory to developers. It only sets the base for pricing and developer are still free to set higher prices if they wish. With the vast majority of applications in a 'race to bottom' in terms of pricing, a lower price should stimulate demand. It also takes into account the conditions at play in various regional markets, offering more flexibility to developers to maximize their return from a market.
It also has a secondary benefit for Google, which is perhaps more important for the long-term health of Android.
In general, lower pricing should boost the sale of applications in the Android ecosystem. More applications being sold means more users in the ecosystem, more payment card details on file with Google, and more opportunities for add-on sales. While there is a significant volume of free apps already available that should not be discounted, increasing the volume of sales and downloads across the board is Google's goal.
Remember that these apps generally create additional revenue streams for developers through freemium purchases or in-app advertising and it's the latter that Google will be looking to boost. The more applications that are downloaded, the more advertising inventory that Google has to service, with the resulting rise in revenue going to Google.
As the relatively valuable desktop advertising market reduces in the move to mobile devices, Google first needs to maintain its available inventory, but also boost the income from mobile advertising through volume and efficiency. The raw material of space requires a greater volume of apps and publishers that rely on Google's advertising as their income stream.
Expect more steps in the future to boost the volume of apps being downloaded around the world.
