Specious bit of hand-waving featuring made-up numbers. My rule-of-thumb is to disregard people who plead virality, especially if they call themselves marketeers.
High sales get you into the top 10 lists which is really worth having (you can call that viral if you're desperate), otherwise high sales increases both the support burden and the likelihood of negative reviews.
However, an app like this has niche appeal (writers) and there is no doubt that exposure within that niche is beneficial. So word of mouth is important, but is not gained by simplistic approaches. Promotion within the niche is likely to be more productive than promiscuous price cutting. For a game, a different strategy would be appropriate.
On the other hand, there is a limited pool of potential customers in this world. If you have a pool of 100, better to sell 10x for $10 today than 100x for $1. In the first scenario, you have 90 more customers to pursue tomorrow. In the second, you either need to make a new unrelated product with a new purpose or different audience (ex. Sony), expand your audience (Nintendo + Wii) or invalidate/depreciate the old one (Apple) to secure any more sales.
Edit: I forgot, there is also, extend your product (DLC)
In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1