Finding the price point

One of the main challenges of selling a product is determining it's price. Set the price too high and people won't buy, set the price too low and sales may not offset ROI. Unlike in the physical world of CD, DVD or books, in the digital space, the good news for the seller is that there aren't any added production costs once the MP3, MPEG, or PDF is done. Since transmission of digital product is done by download, there's no inventory issues to contend with. However, that doesn't mean there aren't serious challenges ahead for selling in the digital space.

What criteria should be used to set the price? If there's a physical counterpart, should the digital price be some percentage of that, for example 80%, or should it be independent and have a ceiling, for example $0.99 for an MP3? 

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