The Sydney Writers centre reposted a great article by Elle Lothlorien about how she adjusted her ebooks prices upwards and increased sales. She postulates that a few different reasons account for the behaviour, and compares this to expensive coffee at Starbucks. There are a couple of insights into reader approaches to pricing. Having started at $2.99 she says:
The first revelation took place at the beginning of October. While skimming various Kindle reader forums, I ran across a thread on the topic of pricing. One reader wrote that she never bought a book that was $2.99 or less because it was sure to be self-published “indie crap” riddled with typos.
This reader perception doesn't even have to be true; the simple fact that it exists needs to be taken into account.
Consider this: In mid-October I raised the price of The Frog Prince to $3.99. I immediately saw a jump in sales. And when I say immediate, I mean overnight. Within a few days the book had leap-frogged for the first time onto two Amazon Top 100 lists.
The article is fascinating and pretty detailed. But if you are feeling a glimmer of excitement, read what happened next:
At the beginning of November, I raised the price to $4.99. In November I sold 224 copies. I raised it again to $5.99 at the beginning of December, and that’s when the whole thing began to pick up steam.
Even more excitement! If you're interested in managing pricing on your self-published books you could do worse than read it: http://www.writingbar.com/2011/12/interviews-with-writers/one-author-shares-what-she-learned-from-starbucks-pick-an-ebook-higher-price-and-turbocharge-her-sales/