Dean Wesley Smith is well-known for his view that the best price for ebooks isn't 99 cents, it's not even $2.99. He believes that, all things being equal, the best price for ebooks is $4.99. He writes:
I did this post originally in November of 2010. And at the end of this post I said that everything was up in the air and I might change my mind in six months on the price structure. Well, nope. In fact, I am more firm on the price structure of $4.99 for novels than I ever was.Even though I've priced my book, Until Death, at 99 cents, I think that Dean makes a lot of great points. His blog post is well worth the read.
And now I have ten more months data on how that structure works and trust me, it works great.
That said, I have zero problem with loss leader pricing, if, and only if, the writer has some other books to advertise. For example, if a writer has a five book series up, it would make great sense to lower the price of the first novel down to $2.99 and maybe do some give-aways as well of that novel.
Everyone has an opinion on this pricing stuff. My focus is what will get readers a fair value and make the writer a working wage at the same time.