Nowadays, businesses have turned towards aggressive short-term customer attraction/acquisition using self destructive methods, and many Indie authors have joined this new trend.
Now, the most important part of a business is profit. Everything the business operators do is aimed at getting and increasing profit. Acquiring customers is one of those things. You acquire customers so you get more patronage which will add to your profit. But when you sacrifice profit to get more customers, then you're walking on your head, which is what many of us indies are doing. It is sacrificing long term benefit to get short term benefit. When you focus much more on getting the customers and if someday, you can no longer put in that much money/effort to get those customers, your profit nosedives and crashes!
Take the scenario where an author puts in so much time writing, getting the book ready and finally publishing it. Then he/she reduces the price of that book to an abnormal level, say from $2.99 to $0.99 just to attract more sales. Two things would happen. One, that author will make less profit and Two, the author will attract a lot of customers that don't like to spend much on books or don't have much value for reading. When the author continues this trend with other books, it becomes a very big problem, because it not only affects him/her alone, but also affects other indies. Those who sell an equivalent product at the normal price would lose customers and the author selling at the abnormal price would gain those customers who (like I said) are usually low-spending. But they both lose profit! This action effectively pampers those customers and make them want more. It's like a cheap drug, they get addicted quickly. If the author realizes his/her mistake and tracks back, many of these customers will go elsewhere (while the loyal ones would remain). But, worse still (as is the case nowadays), if the author does not realize his/her mistake and continues in the status quo, the customers would stay! Which effectively gives the author a feeling of success and he/she starts to advise others to follow that example. When they take the advice and start selling at an abnormal price, they pamper more and more customers, over-indulging them and making them see this abnormal price as a normal price. If they see the real normal price elsewhere, they think it's abnormal! So they tell the author of that story, 'It's way too high! Why don't you set your price like Author A's?' And when that author asks Author A, A would say, 'I make so much money by setting my price really low!' That's a successful person talking, so you join the train, right? You get more sales setting your price at 33% of normal price. So you make x when you could have made 3x.
As more people joined the bandwagon, more average-spending customers are forced to become low-spending customers because Author A and her gang have reduced the value for quality. As a result, they have not only reduced their own profit, but they have also reduced the possibility of success of new and struggling authors! The big guys would keep selling big because they're already very well-known, but the new guys who have just come in and started selling at the normal price would get ignored and pushed to the side, simply because something as good and even better than what they're offering is being sold by Author A's gang for far less than its normal value. If the new author decides to continue normal pricing, he/she would have to work ten times harder than normal to catch the notice of dwindling average-spenders. The high-spenders would ignore this author because he/she has an average price and the low spenders would also ignore him/her because he/she has a high price.
Bottom line: As you set your price to an abnormally low level, just remember that you're not only reducing your profit, you are also setting a dangerous trend that would destroy the careers of new indie authors. So instead of focusing on pricing, why not focus on quality content and other less dangerous, more profitable and longlasting means of advertising? Let's not do it because others are doing it, let's do it because it's right. Be independent, Indies!
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