According to recent Smashwords analysis the most common price point chosen by self-published authors is around $2.99. Smashwords CEO Mark Coker said ”In last year’s survey, $.99 was a more common price point than $2.99. In this year’s survey, $2.99 was [chosen] about 60 percent more often.”
… However, according to Smashwords $3.99 is a more profitable price point!
“One surprising finding is that, on average, $3.99 books sold more units than $2.99 books, and more units than any other price except FREE. I didn’t expect this. Although the general pattern holds that lower priced books tend to sell more units than higher priced books, $3.99 was the rule-breaker. According to our Yield Graph, $3.99 earned authors total income that was 55% above the average compared to all price points.” Coker also commented that “Books priced between $.99 and $1.99 continue to underperform when we look at the book’s total earnings. $1.99 performs especially poorly. It’s a black hole. I’d avoid that price point if you can.”
Every book is different, and no two industries are exactly alike. So $3.99 might not be the perfect price point for your title. There is certainly not a guarantee that you will sell more books or show a larger profit, but the reading community seems to be accepting and embracing ebooks at a higher price point.