$3 to $5 is the price point that did it for me.
I wouldn't think of reading an eBook until I found that
Baen had them at a reasonable price (and DRM free).
It was actually the free library that hooked me. I'd downloaded a few titles into my Clie to pass the time and ran into a few authors that I liked enough to purchase the rest of a few series. it's nice to be able to get the entirety of a series
now and not have to wait for shipping or drive all over town to find the one copy of book three in series x.
If I'm going to pay more than $5 I'd also like a hard copy to go with my soft copy. I read from my Clie at work and hard copies at home. It wouldn't be too much trouble to give someone access to a soft copy right away while they are waiting for their shipment to arrive.