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I think that $2.99 is more appropriate. You have to figure, with a non-DRMed book, that there's going to be pass-around circulation, so how much are you actually receiving for a $0.99 book per reader? If you're getting about $0.40/book, that's maybe a dime per reader? A nickel? (I read once that the average pass-around for a paper book is 7 readers. I have no idea what it is for an ebook with no copy protection.)
At three bucks, maybe you'll get $1.50 or so per book sold after various discounts, which is maybe 25 cents, more or less, per reader. Jeez, that's like begging for spare change...people pay that to park on a public street for half an hour. Is that unreasonable? I don't think so.
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