I don't believe Steam has their crazy sales with the primary focus being on undercutting competition. Generally, the sales are for slightly older games (1 year or older). These games have likely seen a dramatic drop in sales. Even as low as Steam reduces the price point to, I'm willing to bet the revenue bump is huge. It's an effective way to derive profits from otherwise low volume titles.

"Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40." http://www.geekwire.com/2011/experiments-video-game-economic...