Back when I was in high school, a friend's mother decided to publish a book. She went the self-publishing route, and in the process spent something like $2000. Unfortunately, the book had minimal sales, to say the least, and she lost money on the deal. However, she may have felt it was worth it to achieve her lifelong goal of becoming a published author. (There's a reason why they call it "Vanity Press.")
These days, of course, it's a lot easier - and cheaper - to self-publish. In fact, you can essentially publish for free. For example, you can just go to Createspeace or Kindle, upload your novel, pick your free cover (or design one yourself) and you're done. No out-of-pocket expense whatsoever.
That said, I think there actually is a cost to publishing via the do-everything-yourself route. Basically, as I mentioned in my post on pen names, very few of us are adept at multiple disciplines. Thus, if you're a great writer, what are the odds that you are also an excellent artist? An impeccable proofreader (especially of your own work)? And even if you're hitting on all cylinders and are a whiz in every other area, there's a cost in the sense that doing all these things yourself takes you away from your bread-and-butter: writing. In other words, every second that you spend doing some of these other activities diminishes your overall return.
Of course, someone is bound to argue that outsourcing all of these activities costs as well, and they'd be right. But what is that cost? In short, what's the budget you need to anticipate if you're in mind to self-publish a book?
To answer this, you really need to think about what services you need. On my page of Self-Publishing Links, I try to cover the basics in this arena, so let's take a look at what you might hypothetically have to spend on a novel of, say, about 200 pages:
Publishing - As previously stated, this is essentially free, so cost is $0. (Just to be clear, I'm speaking of ebooks and print on demand (POD) services, not traditional vanity press publishing).
Editing/Proofreading - Prices vary, with some people charging by the word, others by the page, and so on. I think that budgeting $1/page should be adequate.
Conversion/Formatting - Again, prices vary. I've seen some that strike me as relatively expensive (over $100) and others that are extraordinarily cheap ($5 on Fiverr). Searching for some middle ground, let's just budget $69 (which is the cost of the Kindle Conversion service on Createspace).
Cover Art/Design - This is another one that is all over the place in terms of cost. An artist with name brand recognition could charge a hefty fee that runs into the thousands. Or you might come across someone who is immensely talented but undiscovered at the moment and commission them on the cheap. In short, prices here can be as low as five bucks or cost thousands of dollars. For argument's sake, though, let's assume you can get it fairly cheap - maybe a pre-made cover for about $50.
ISBN Numbers - I enjoy having my own ISBN numbers and being my own publisher, but it's not a necessity. Let's assume that in this arena you're an extreme cheapskate and are willing to use an ISBN number provided by Createspace, B&N or whatever publishing platform you use. Ergo, cost is $0.
Copyright Registration - As I mentioned in my other post, copyright protection attaches to your work as soon as its created. However, let's just assume that - in addition to being cheap - you are a paranoid mofo, and want additional protection. In that instance, online copyright registration is only $35.
So what's the total damage?
Cover Art/Design: $50
ISBN Numbers: $0
Copyright Registration: $35
In addition to this, I'd say that you should tack on some additional funds to cover incidentals. For instance, you might want to order a proof for review purposes. You may want some copies to give away to friends and family, or to send to potential reviewers. You might also want to do a little advertising. Thus, I'd say that it's probably worthwhile to bump your budget up a little and round it off to a nice even $500.
Of course, within that $500, you can fudge numbers any way you like. Maybe you absolutely have to have your own ISBN numbers and will shell out $250 for 10 of them and forego copyright registration. Maybe you can find a retired English teacher who will proof your work for $50. Maybe you've got a cousin who's an artist and will work for free as long as you put a link to his gallery on your blog.
Finally, to the extent that $500 sounds like a lot of money (and I'm not saying that it isn't), think about how much time you would spend doing the things noted yourself. How much time would you spend proofreading your 200-page novel? (And if you say, "Not much" or "Just a couple of hours," then your work is pretty much assured to have some typos/errors.) How much time would you spend creating that perfect cover? How much time would you spending formatting/converting your work for publication as an ebook?
Basically, you need to figure out what your time is worth (slap a value on it) and determine if you'd rather spend that time - and if that time is better utilized - writing, or doing all this other stuff. In my book, I'd rather spend the time writing, and leave the other stuff to the professionals. It may cost a little moolah now, but in my opinion it's worth it and will pay big dividends later.
*One added note: I can't emphasize enough the importance of a good, professional cover. From a novelization standpoint, it's the face you're showing the world, so decide whether you want it all dolled up, or more like someone who just rolled out of bed and immediately went about their day without any attention to hygiene, grooming, etc.