I've been selling for almost 2 years in the Android Market, have had millions of downloads of my free apps, and tens of thousands of paid app sales.

P.S. I have not been invited into this special $0.10 club. I'm guessing because my apps don't scale well for tablets at the moment.

Lowering my price in the Android Market has done nothing for me personally. Running a sale may increase the download rate, but it seems to even out or lose me money in the end. It doesn't increase enough to convince me to leave my apps at a lower price.

HOWEVER, I feel that if I had the opportunity to go all the way down to, say, $0.25, I would get tons of sales.

I probably won't run a sale again. The bottom line is that I make more money when my apps are priced higher even though I sell less copies. So, being that I'm in this as a business, and not a hobby, I have to stick with higher prices.

Don't forget that even if you do make more money on the sale, you're also massively increasing your customer base, and therefore your support costs, so any extra money you make must be worth the increased support overhead for it to be a worthwhile tactic.

Also potentially massively increasing the world of mouth marketing channel though.

This stuff seems to work incredibly well on Steam - I don't see why it wouldn't help here. The big value isn't just the front-page promotion, it's also the time limited sale for a bargain price.

I suspect the main effect in the long term will be to boost the app's ranking in its category (because of how many downloads it got) and in search results (based on downloads, active users, ratings, or whatever algorithms Google actually uses). Whether the app will manage to take advantage of that and hang in there, or will fade back to obscurity, will probably vary from app to app.

It's hard to say in this instance, Google has historically been very hands-off when it comes to the Market. I think this is the first time they've explicitly done a sale like this; as opposed to devs operating on their own.