Does anyone know the optimum price for a Kindle book?

77p on Amazon Kindle

 This time last year another writer suggested that I put my Regency books in a virtual box set. I took her advice and got the wonderful Jane Dixon-Smith to design me a 3-D cover and put up the first of two Duke Series box sets. I was astonished that the first box set sold over 1000 in the first week and continued to sell well until the end of June. I priced it at £1.99 – the books were selling individually at 99 p

£1.99 on Amazon Kindle

Emboldened by this I got the second box set up in July and this also sold hundreds of copies. Strangely I still continue to sell individual copies of the books that could be bought much cheaper as a box set.
I told several friends about the wonders of box sets and they also had remarkable sales.
However, when I adjusted the price of my books to take into account that some are novellas and others full-length books, I was forced to put up the price of my box sets as well. Not unexpectedly books that were now £1.99 instead of 99 p and box sets that were now £2.99 instead of £1.99, no longer sold in their hundreds. I put the price down to the novellas to 77 p and sell hundreds of these every week.
Although I have double the amount of books available for sale on the Kindle I'm selling fewer copies of my longer books than I did this time last year but my royalties remain about the same. I'm about to release a four book box set – all the titles are novellas. This will be at £1.99 and I'm waiting to see if this is in fact the magic price.
I wonder how many readers only look at books under a certain price – I tend to go for bargains when Amazon  sends me a list. The other day I bought a recent Michael Connelly for £1.32 and three Lee Child novellas for less than a pound each. I rarely pay over £3.50 for any e-book– even one by Christian Cameron.
Are you prepared to pay more than £4.00 for an e-book if it's by an author you want to read? What about books by indie authors? Do you always expect them to be less than two pounds?
I wanted to buy Julie Cohen's 'Dear Thing' - but to my surprise the paperback was cheaper than the e-book so I got that instead.
I know that other writers change the prices of their books on a regular basis – sometimes putting them as high as £4.99 – I would be interested to know if their royalties remain the same despite the change in prices.
I'm still not sure whether putting the longer books up was a good idea, but I'm going to stick with it as I don't think a 30,000 word novella should be the same price as a full-length book.
Mass-market paperbacks are on their way out – so the pundits say. I certainly buy more books for my Kindle than I would ever have considered when there were only paperbacks. Imagine buying over 100 paperbacks a year? I doubt many people do that, but I'm sure thousands of people by over 100 e-books.

£1.99 - out May 23rd.