One of the advantages that indie authors have over traditionally published authors is that indies can set their own prices. Traditionally published authors are at the mercy of their publishers, who care more about maintaining fat margins than what's good for their authors. Unfortunately, most indie authors have taken that freedom to mean pricing their books as cheaply as possible, or even giving them away for free.
I admit that I started out in the same "cheap e-books" camp because I thought that was the only way I could sell any books. My short story collection, Numbers Plus Four, is priced at 99 cents, and my novel, George and the Galactic Games, sells for $2.99. But the more I read about various indie author success stories, the more I believe that cheap prices only devalue an author's work. If you've spent months (or years) writing a book, why do you think it's only worth a couple of dollars?
Earlier this year, Dean Wesley Smith published his thoughts on pricing indie books in 2012. With traditionally published e-books selling in the $7 to $12 range (yes, $12 for an e-book!), there's plenty of room for indies to play in the $7-and-under price range. According to him, my books are priced at about half of what they should be. However, I realize that I'm not Dean Wesley Smith. I'm still an unknown author with just two books under my belt. I also don't think I'll raise the price of the two books I've already published. The pleasure of publishing them and seeing them on virtual store shelves is enough reward for me. However, with the novel I'm writing now and future books to come, I plan to start testing higher price points.