Merri, I think the view that self-publishing costs a lot comes from people who want to get their work professionally edited before it's published, and who would prefer a professionally designed cover rather than a home-Photoshopped one, and so on.
Exactly.
Some things the author can handle themselves, but even though that saves money, it costs in time. (Time that could be spent writing more books.) I've self-pubbed a collection and a stand-alone short story, and though I didn't need an editor--these were all previously published--I still spent a lot of time with designing the covers, and copyediting, and double-checking the different versions.
To answer the OP's question--adding Smashwords to your list of venues makes good sense, but only if you add your book to their premium catalog. So far, I've sold equal numbers of my collection through Amazon, B&N, and Smashwords, but the majority of my Smashwords sales have been to the Sony and Kobo stores.
For anything you plan to give away, you can either join Amazon's special program and give them exclusive rights to distribute the work, or you can make the item available there for 99 cents, and for free on Smashwords. That's what I'm doing with my short story, and so far, I've sold a dozen or so on Amazon, the same on B&N, but have had over 300 downloads through Smashwords.
The one thing I've learned so far is that it can take a while to build momentum, and to do that, you need to have several works at each venue. I had slow erratic sales on my collection, but when I added the free short story, sales picked up for both.