When paid is better than free.

In no particular order:

Easier to rank in your category with a smaller number of sales.
The ability to put your application on sale. Don’t underestimate the traffic sent by people looking for price-drops. It’s not insignificant.
The momentum of switching from free to paid provides an excellent temporary boost in the rankings.
Paying users give a crap and want it to work. Freetards give you a 1-star rating and move on. Or leave a dumbass review that clearly shows they are from Arkansas.
The perception of value.