Recently Mark Coker, founder and CEO of the ebook distribution platform Smashwords, posted an article on the Smashwords blog about the state of ebook marketing. Not only does he discuss of ebook sales statistics, he also talks about how to price an ebook.
He notes that authors of books priced $2.99 actually make more money and reach more readers than those who sell their books (both self published and traditionally published) for $6.99 and above.
If an author can earn the same or greater income selling lower cost books, yet reach significantly more readers, then, drum roll please, it means the authors who are selling higher priced books through traditional publishers are at an extreme disadvantage to indie authors in terms of long term platform building. The lower-priced books are building author brand faster. Never mind that an indie author earns more per $2.99 unit sold ($1.80-$2.10) than a traditionally published author earns at $9.99 ($1.25-$1.75).
He states that looking at the bestsellers lists at Apple, Amazon, and Barnes and Nobel reveals an increasing number of indie published books. In fact the week the post was published (July 25, 2012) seven of the top 30 bestsellers in the Apple iBookstore were distributed by Smashwords.
Be sure and read the comments. They have a lot of useful information for authors.
Another think you want to consider when deciding how to price an ebook is this warning about using Smashwords to leverage your ebook as a free read on Amazon. Because of the wide distribution from Smashwords, raising the price is extremely difficult or impossible. Treat your Smashwords price as the highest price for that particular book.