Kindle e-book pricing

E-book prices are all over the map, from plentiful freebies to the typical "major publisher" price of $9.99.

This is a complicated issue and the best thing about Amazon Kindle is it lets the author set the price. I've published in mass market paperback and trade paperback, but when I released my first novel The Red Church on my own, I set the price at $1.99. I did this for two reasons--at this price, I make about as much in royalty as I did in print, and because I want to reach new readers. Readers are my primary goal, not money. I can make money elsewhere. At the same time, I want to value my work and this price seems fair while also (as others pointed out) encouraging people to try me who might not have heard of me before.
That novel sold well on release, probably around 35,000 copies, but it's been out of print for four years. I want people to read it because I still get excited about it. So any new readers and additional income is gravy to me. However, I could understand setting the price slightly higher for an original release--to between $2.99 to $3.99.
Major publishers are still caught in the dilemma of setting e-book prices high to protect paper sales. They are worried about themselves, not about readers. And that's what they should do, watch out for business, because they are under siege when an author can simply post the book themselves, make it available to a worldwide audience at virtually no overhead cost, and make decisions on when a book is released, what the sales price is, and how it is presented. The author still has to do most of the marketing but that's always been true for all but a hundred or so who are highly successful and in whom publishers have invested much.
I priced Burial to Follow at 99 cents because it's a 20,000-word novelette and I want an audience for it and it was published in a hardcover for limited edition so it hasn't had a chance to reach a big audience, and I consider it one of my top five works. I will soon be releasing a short story collection and mulling over the price now, and I'm putting together a free promotional writing-advice e-book.
This is my personal situation and that's why I've made these decisions--others obviously feel differently, but i modeled my prices after JA Konrath's, who is doing very well in both print and e-book.
And, when all is said and done, why not meet readers halfway, or even further on their side of the bridge?