SmashWords is the choice of several pros, including ebook guru J.A. Konrath and Monk mystery writer Lee Goldberg.
http://jakonrath.blogspot.com/2011/01/guest-post-by-lee-goldberg.html
But they're both established pros with a large backlist. As they say on the infomercials in the fine print running fast at the bottom of the screen: "Results not typical."
It offers books in various formats, but authors should list the books separately on PubIt! (Nook) and Kindle is a must. Many ebook fans will have heard of those, while fewer know about SmashWords. You want your book available in as many "stores" as possible.
I think the royalties are around 80% of the price, paid quarterly. Others offer monthly royalties and quarterly from 65-70% of the list price.
If your book is 2.99 on SmashWords, you must list it at the same price on PubIt! and Kindle, even if they offer lower royalties. The rules are it has to be the same on all of them, which is the lowest price you set. Can't have it .99 on one and 1.99 on another.
One day there was a tech glitch and one of Lee Goldberg's books--and presumably books by other authors--dropped from 2.99 to .99 on SmashWords.
That meant that all across the other sites, the price of that title dropped to .99.
He made the most of it and blogged, FB posted & Tweeted, so if readers wanted a "sale" copy, this was their chance.
As it was the first book in a series, it's not unheard of for writers to drop the price intentionally in order to build an audience.
What to price your book? Check this blog by Dean Wesley Smith:
http://www.deanwesleysmith.com/?p=3940
However, I think those prices are for new books by self-publishing established pro writers with a readership. A debut writer may have to start lower. No one is going to buy a 1st novel by an unknown for 9.99 unless it's a completely amazing bit of writing and the author has a good chunk of the book there for shoppers to sample read.
And I'd still consider keeping the price down.
I'm established and putting up a book on Smashwords, but my price will be 3.99--about half the price of a paperback. That seems fair, considering my spot as a mid-lister on the publishing ladder.
How to have great sales? To quote Konrath: "I've said it time and again: Don't Write Shit."
http://jakonrath.blogspot.com/
Also make sure
this blog post is bookmarked. It should be required reading by those considering self-publishing!
http://terribleminds.com/ramble/2011/02/02/why-your-self-published-book-sucks-a-bag-of-dicks/
Good luck!