How much is too high? Don't fall into the trap a lot of indies do and undercut your prices. By utilizing discount codes, you can sell directly to your fans for whatever price you want. The important part is getting as wide a distribution as possible.
I don't mean to sound harsh, but most of your paperback book sales will be to friends and family, and likely in person, so your list price is irrelevant, because you can reduce the price to what you want with discount codes.
The minimum price CS will allow is a dollar and change over your author purchase price, so a 300-page book is around $6.99 or so, but you couldn't do expanded distribution.
I have a somewhat different philosophy on paperback pricing. I look at my genre and see what the trad published bestsellers are selling for (usually around $9.99 the last time I looked, though obviously book length makes some of them a little more than that.) and try to avoid going over that unless the length of the book demands it. After all, I'm a relatively unknown author. Are people going to pay more for me than they would for a household-name bestseller? I'd have to say no.
That does mean I get a relatively low royalty, and I have to forego expanding distribution. However, I tried expanded distribution, and it killed my paperback sales on Amazon without netting me even one sale in the expanded channels, so eventually I dropped it. To illustrate the effect, I just tried switching on the expanded channels for my latest book, currently selling at $10.50 (minimum price is $9.97.) With expanded channels switched on, the minimum price jumped to $14.95, almost a $5.00 increase and $4.45 over the current price. Even on shorter books, it's usually a $3.00 or more jump. Of course, the extra is to pay the middlemen.
I also experimented with using a different edition for expanded distribution, so I had the benefit of a low price and Amazon and reach. However, I abandoned the idea when the more highly priced edition made not one sale over several months. All it did was irritate me by appearing first on Amazon for no apparent reason.
It sounds as if you sell more paperbacks than I do just in general. I don't really look at the paperbacks as a revenue source. I look at them as a way to get more books into the world (via Amazon giveaways, for example) and a way of satisfying the crowd that doesn't think you're a legit writer without a physical copy. I do sell a few, as long as I keep the price relatively low. Selling a few is better than selling zero.