I ran into an acquaintence the other day who is interested in the writing life. She wrote a nice memoir about her growing up years. I think she had a legitimate shot at getting picked up by a major publishing house in NYC, but her patience just wasn't there and so she chose the self-publishing route.
Two things I always tell folks who are aspiring authors-- 1) the publishing industry and process is S-L-O-W... and you'll do a LOT of waiting... it's ok, and it's part of the process; and 2) you shouldn't have to put out any money to have your book produced.
In other words, you should never pay an agent out of pocket (they get paid only when they sell your work to a legitimate publisher). You should never pay out of pocket for an editor (real publishing houses have a staff of editors just waiting to be assigned to your book). You shouldn't pay anyone to read your book (a short story contest, maybe the entrance fee). You should never pay for production costs -- printing books, cover photography, typesetting, etc... You shouldn't have to hustle to find a bookstore to sell your books. Real publishers take care of all this when they take you onto their label.
My friend who's interested in the author life started telling me about something to do with Craigslist and her book, and I put a stop to her conversation and told her NOT to send it or deal with the "publisher." Real publishers don't advertise for clients on Craigslist. They don't need to. Literary agents, once you're fortunate enough to get one, shop your work around to legitimate publishers until they find the right match and right deal for your project. Guide to Literary Agents site.
Now... what are some things you might end up paying for on you own.
AFTER you're picked up by an agent and publisher, you may end up paying for your own website. Most authors I know do pick up this expense... or they do the free route -- MySpace, Facebook, Blogspot, etc...
You may end up paying a photographer for some professional photos for your book cover and website. I get new pics done for every book.
You may end up investing (i.e. paying for) some of your advance money in your promotions -- postcards, bookmarks, online or print ads, mailings, etc... What used to be a "C-list on the label author thing" is now creeping up to the "B list on the label thing" during the current economic situation.
And here's the doozie... and in this economy, I can guarantee you'll pay for this one (unless your name is E. Lynn Harris, Terry McMillan, or Jackie Collins). You'll pay for your own book tour and travel expenses related to promoting your book. Yes. You. Will. Many of my friends are talking about how they're figuring out this expense, especially when book advances are stabilizing or getting smaller. They're getting creative, cutting back on travel, or combining tasks -- day job travel with book travel; book conferences with book club visits. Or, they're trying to get speaking gigs at universities. Those gigs usually come with a small honorarium or travel.
Finally, book advances are getting smaller. But no worries... though the advances may not be the same as the good old days, when you're picked up by a major publisher, you get a whole team of support and staff there to support your book -- artists to design your cover, editors to read and feedback your book, marketing folks to develop the plan for getting your book out there, accounting folks to figure out your sales and royalties, and the BIG one... a sales/distribution team that will get your book in all the major bookstores. They're all part of the deal when you get signed by a major publisher. And you don't pay for any of that.
Again, aspiring authors... just remember patience and no payment. Write the best project you can, and the rest will take care of itself by the Universe.