Many indie authors first offer their books for free in order to gather some reviews. They then price at $0.99 as it seems that readers are willingly to gamble 99c on an unknown author. Once they have a readership they will price their next book higher.
Sometimes Amazon will discount the books, but the author will still receive 'royalties' on the original price. There was even a case of Amazon offering a book for free and it was downloaded 1000's of times, but the author still got his royalties. (We all want to know how we can get them to do it for our books!)
