After I published my backlist online and it had been there a while, I determined that readers want reasonable prices on e-books (duh, makes great sense) and I made the decision to sell my books for $2.99, across the board. New titles, older titles, one price—$2.99. It's fair and it worked for all parties involved, including me.
My books are available through two primary distributors, Kindle and Smashwords. Smashwords also acts as a clearinghouse, distributing my books to Barnes & Noble, Sony, Kobo, Apple and Diesel. Here’s where things got sticky.
If you buy my books directly from Kindle you’ll pay $2.99. But those other distributors that Smashwords works with can set whatever price they choose. So, for example, Barnes & Noble discounts my books by 20% and was selling them for $2.39. Several other sites also discount my books by varying amounts, sometimes taking the price as low as $2.19. The problem worsens because Amazon will not be under sold, so they have a web crawler out there looking for the lowest price, which they will match. It may not sound like a lot of money, but believe me, it is. For a good example of what kind of difference it can make, go see what Joe Konrath has to say at http://jakonrath.blogspot.com/2010/09/ebook-pricing.html.
Although I didn’t want to change anything, to even things out I raised my sale price at Smashwords (and therefore, the other stores) to 3.99. Now the books are discounted to $3.19, a bit more than $2.99 but close enough to be fair. I’m not making more money—don’t forget, everyone else gets their cut before I am paid—but just about the same.
So if you’ve been baffled by the disparity, I hope this answers the question.