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The lower/free price point is to generate interest and get the book into Amazon's sales charts. Once it's there Amazon will assume it is a "good" book and start cross-promoting it to people who have bought similar books in the past. When that happens it doesn't really matter how much you charge for you book because enough of the people Amazon targets will buy it regardless of price. Then when sales start to drop off you reduce the price and start again. Or do it with another book if you have more than one.
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