The new Moto G phone starts at USD 179 in the US without a contract requirement. That compares with USD 600 or more that people must pay for phones without traditional two-year service agreements.
Motorola, which is owned by Google Inc, said on Wednesday that it will target an estimated 500 million people worldwide who can't afford phones costing more than USD 200.
In the past, the company said, those consumers were limited to phones with technology that's at least a year old and thus unable to run the latest apps and services.
The company is targeting not just emerging markets, but budget-conscious consumers in the US.
Although people can often get phones with contracts at the lower price, service fees are higher because they include the cost of subsidizing those phones. And many people don't have good enough credit to qualify and are limited to so-called pre-paid plans, which aren't eligible for the subsidized prices.
With the Moto G, Motorola is trying to offer a device that is closer to what's available on leading high-end phones, although it won't work on the faster 4G LTE networks emerging around the world. That's in part because many target customers are still on 3G or even older technology.
The phone starts selling in Brazil and parts of Europe on Wednesday. It will be available in Canada, parts of Asia and the rest of Europe and Latin America over the next few weeks. It is expected in the US, India, the Middle East and additional markets in Asia in January. Motorola expects to start selling it in selected African markets early next year.