For the better part of a year and a half, I have ignored most of the advice bloggers have given about pricing your work on Amazon. It's not that I undervalue my work, but rather I was more concerned about building fans and reviews than making money.
With the exception of the one novella I have offered in print format, none of my work on Amazon has ever been more than $0.99. Each of the stories there are short stories, which themselves are a tough sell, so I never felt right about charging more than a dollar for a few thousand words of entertainment.
My other main driver for setting the pricing was to price things the way I shop: cheap or free will always win over more expensive for less. Except that's not really how Kindle works are perceived. Price, it seems, is an indicator of quality, not quantity.
When searching through books on Kindle, you do find lots of things for free. I have downloaded quite a few myself, hoping for some reasonable things to read to pass the time (mostly during air travel).
What I've found in these free books is a lot of barely-readable, poorly-edited or just plain boring stories. Some of them read like textbooks. Others were just bad. But I didn't pay anything for them, so I didn't get too upset.
For anyone publishing on Amazon, you cannot sell anything for less than $0.99. I know what my motivations were for selling at this price, but I am not able to convey those things to perspective buyers. What seems to be the pervasive attitude among buyers is that if you are selling it at rock-bottom prices, it must be rock-bottom quality.
For some writers, this is clearly the case. The self-publishing world of Amazon has opened the doors for a lot of people who probably shouldn't be selling stories or books on Amazon. (Some of my early work might fall into this category, frankly.) For a buyer, it only takes being burned once or twice on a cheap story to avoid them altogether.
And if you happen to have shabby covers (I have a couple) on your $0.99 bargain work, well, you probably aren't going to be doing much in terms of sales. In that sense, your price coupled with your cover gives off the impression that what's inside looks like what's outside. It doesn't matter what inside to most buyers on Kindle, they'll save their dollar for something which looks better, even if it is a few dollars.
So what is the right price? I won't really attempt to answer that definitively, since there are a few factors to consider.
First, no pricing is going to fix a lousy cover or book description. If you can't afford to hire someone to do a cover for you and your cover is terrible (even in the best of lighting), then you're better off going simple. Look at a book cover from the 1950's: red background, gold type in a plain font. It isn't going to be any worse than your current cover.
If your work has some nice artwork and looks compelling, you probably need to sell it for $1.99 instead of a dollar. It can be hard to justify paying that for a 1,000-word story if you're a buyer, but this seems to be the going rate for quality shorter works. It's a better bet to combine a few shorts together and sell them for a few dollars than to try to sell individual ones.
Books which are $1.99 or $2.99 are still a relative steal on Amazon, so you're not pricing yourself out of the market. At worst, you risk a poor review for having something be too short for how much someone paid for it. Those can hurt you a little, but the risk is probably worth it most of the time.
The other upshot to having higher-priced books on Amazon is that when you do a Countdown Deal or Free Promotion, it looks like a great value. Something which was a dollar and is now free is not nearly as appealing as something which was three bucks but is being given away for nothing. These promotions are necessary if you want some volume. And volume is key for reviews, which pushes you up the search results. The cycle feeds on itself from there, and the next thing you know, you've made 20 dollars on your book.
The blogs I've read haven't always been clear on some of these points, but I personally went ahead and made the mistakes in spite of the advice (you're welcome). The bottom line is that if you feel that your work is only worth $0.99, then don't try to sell it. Hang on to it and perhaps package it with something else which you can sell at a higher price.