Specifically, I saw that a self-published book could be offered on Kindle for 99 cents, and still turn a 35 cent profit. I was stunned! I walked around in a daze for, well, days, trying to explain to people what that meant. No one seemed impressed. To me it was like receiving the keys to the kingdom, and I immediately set a goal to become the world’s greatest 99-cent author.

Joe: Which, at this moment, you are. This fascinates me, because when Amazon began offering 70% to ebooks priced $2.99 and up, a lot of people considered staying at 99 cents to be slumming.

Which was naive. Coming from a legacy publishing background, I knew that 35% royalties were much better than anything the Big 6 offered. Even so, when I first got into this, I thought that cheap ebooks would be a loss lead, that would get people to read my more expensive books.

And yet, when I lowered the price of The List from $2.99 to 99 cents, I started selling 20x as many copies–about 800 a day. My loss lead became my biggest earner.

via A Newbie’s Guide to Publishing: Guest Post by John Locke.