What a difficult thing to answer, as it depends on so many variables. I lean toward a lower price, and here's why.
An extended shelf life = More Sales.
Self-published e-books, unlike traditionally published hardcovers and paperbacks, have an indefinite shelf life. My book won't be pulled from the internet after six or twelve months. I don't have to squeeze as much “value” out of my book as I possibly can before my publisher back-lists it.
Instead, I can play the numbers. Without time constraints, I can aim to sell more copies and make a profit through bulk rather than through margin. You know, like Wal-Mart does.
Lower production costs = More Savings.
Self-published e-books have very few middlemen involved in the publishing and sales process. I don't have employees. I don't have shipping costs. I have no building to pay a mortgage, lease, or taxes on. I'm not printing a physical book which requires the purchase of ink, paper, a printer, etc.
So why should the reader pay for what I don't have to pay for? That is to my advantage. I'm saving money, and I intend to pass the savings off to my reader.
A better royalty ratio = More Earnings.
I make more per book at $2.99, than I would with a traditionally published book at $15. How? Royalties. By self-publishing I get an 80% royalty. That's about $2.40 a book through Smashwords and $2.10 through Amazon. An 8% royalty on a $15 book would net me about $1.20 after everyone else took a piece of the pie.
Even selling my books for 5 times less than I could through a traditional publisher, I'm still getting twice the value, and I'll likely sell more copies to boot!
Readers more willing to take a risk = More Sales and Earnings.
Inexpensive books are in the reader's best interest. Over a year's time, how many books might an avid reader buy? How much money would an avid reader save by buying e-books or going to the library? A lot of money. Even those readers who only read occasionally will save a lot of money.
It's easier to convince someone to pay for a book that costs five times less money. There's nothing emotional about three dollars. No one is going to stare at a $3 book and think “I could use this money on something better.”
A different perspective.
I don't feel like I'm cheating myself, which seems to be the main argument for higher prices. True value in a book isn't in its price, but in how many readers I reach. Value isn't selling the book once for $100,000, it's selling it 50,000 times for $2.99. I have a far better chance of reaching the second than conning someone into the first.
The readers come first.
I wish to sell my book for less mainly because I cannot justify selling it for more. Why should anyone buy something I write if it costs more than a meal? I would honestly feel guilty if I sold my book for more than a few dollars. My readers have families to feed. They have bills to pay. They struggle day to day.
I want them to buy my book and enjoy it, but I don't think I'm more important than their livelihood. I'm putting readers first. They're just as much a part of the process as anyone or anything else is.
What if I'm wrong?
What happens if I publish my first novel for $2.99 and it doesn't sell? I'm going to do an experiment. I'm going to charge $4.99 and see what happens.
There's only one thing I've heard or read in favor of higher-priced books which makes sense to me. Inexpensive books, to many readers, look “cheap”. The readers themselves may believe they're getting more value from something in a higher price range.
As odd as this sounds (it's the same book, so why should it look better at a higher price?), there is evidence for the psychology behind it.
If my work sells, it won't matter. If my work doesn't sell, what do I have to lose?