In a free market economy, people generally pay what they perceive an item to be worth. While 99 cents for a full-length novel, or worse yet, free, does strike me as lowballing, such works sell well because the price is below the perceived value and is therefore seen as a bargain. And we all love a bargain.
I'll admit that this price hike is part of a broader strategy. I hope to release my next novel in early- to mid-December. When that happens, I intend to cut the price of my first novel down to a sum to be determined. Thus, if I do it right, does the price drop below perceived value.
The problem that many of independent writers face, I think, is that the perceived value of ebooks is quite low. With the proliferation of cheap ebooks has come the public expectation that prices should be in the range of $3.00 or less. Major publishers are fighting back against this, of course, and I have no objection to their doing so. (My quarrel is with their ebook royalty structure but that's a complaint for another thread.)
If a story is worth, say, $27.95 in one format, why is it worth less in another? The value of the medium - hardcover versus paperback, for instance - may vary greatly but the words themselves are unchanged from one to the other. The price difference, therefore, lies in the medium rather than with the story.
It used to be that the cheapest format for a book was the mass market paperback, the small, glossy books found on racks in supermarkets and drugstores as well as in bookstores. That changed when the ebook came along. But publishers have been loathe the undercut the price of their own paper so ebooks have been priced similarly to hardcover and paperback novels, depending on the timing of their release relative to said paper.
So, for now, I'm going to play their game and see if it works for me. Maybe it will succeed. Maybe it fail. There's only one way to find out.
I'll keep you posted.