I read a great article today by Thomas Baekdal called The Myth of the 99 Cent Book. An excerpt:
Another example is if you write a book for a nice market, totaling 20,000 potential readers. And you predict that for the price of $9.99 you will reach 35% of that audience.
35% of 20,000 = 7,000 * 9.99 = $69,930
Then using the same logic, lowering the price to 99 cents will increase sale by a factor of 10 …or cause you to sell 70,000 books and reach 350% of your total audience.
But that is not possible. You cannot exceed your total audience–you cannot even get a 100% penetration rate (not even if you gave it away for free.) If you lowered the price, you might reach 60% instead of 35%
60% of 20,000 = 12,000 * 0.99 = $11,880
There is something catastrophically wrong with how people perceive the price of content.