A couple of months ago I conducted a brief factual study of whether or not it was prudent to reduce the price of several Kindle versions of my novels to a nominal $0.99. Would this increase sales to the extent that the very small remuneration coming my way would be worth it in terms of quantity?
The conclusion was that it was not cost effective. I sold no more in terms of numbers per week and thus lost income. So I restored the cost to $2.99 and actually saw an increase in sales this last month.
I guess, then, that the answer is that unless you are selling in the hundreds of thousands to millions, it does not pay to reduce your prices to a virtual giveaway level.