Unfortunately, there are so many other similar services out there, you’d be hard pressed to find anyone switching over. Look at Freshbooks, for example, the reason they have such a strong user base is because they offer a free model as well.
I would say if your app were to succeed it would need to have a similar model.
But you said “People pay far more than £1200 for a lot less. It all depends on the quality.” so maybe there is not just one factor involved like you say.
I am currently doing something slightly larger for a client and he is paying me £400, it will equate to around £5 an hour I am getting paid, which is not a great deal. But hey, it builds up my portfolio.
Yeah don’t worry too much about the money when first starting, just make sure you don’t allow people to take advantage of you, £5 is cheap for your skillset, this isn’t something anyone can do always remember that.
Make sure you state why it’s cheap,”portfolio building” and also state your prices will rise in the future. One of my clients still expects free stuff.