Ever since Bookbaby launched it has been pitched as a flat fee conversion and distribution service. Bookbaby likes to bandy around the $99 figure, and the developers just love telling everyone that they can afford to do a basic conversion for a cheap fee and then distribute the ebook to the major ebookstores at no cost.
BTW, one important detail that you might miss: Bookbaby doesn't distribute to Kobo. That's not a huge loss but it's still one that you should pursue. Kobo is the 4th largest ebookstore in the US and covers interna'l. markets that others don't (besides Amazon).
Update: Bookbaby is expecting to add Kobo and other ebookstores in the next couple months (by the end of Jan 2012). They're also going to launch BookBaby Print later this week.
Now, I've known about Bookbaby since it launched, but I never really got a good look. TBH I'd never gotten beyond the soundbite, and it turns out that Bookbaby charges a whole lot more in fees than it first appears.
First, the basic conversion doesn't cover working from PDF, InDesign, or a couple other formats - just word, rtf, html, &c. The other formats cost extra, but that's okay; they probably require more work.
The problem is that while there's a $99 fee for a basic conversion, there's also a $19 fee for an ISBN (so your ebook can be sold in iBooks). What this means is that the real price of the conversion is actually $118, not $99.
Oh, and do you know how they like to pitch the service as not charging a commission on ebook sales? While this is technically correct, it's not the whole truth. But you'd have to take a closer look before you would know that.
While Bookbaby doesn't charge a commission, they do charge a $19 yearly fee for each title. That's not a commission, no, so they aren't lying. But they are splitting hairs.
Costs aside, I'm told they do decent work for the $118. I've heard from a couple authors who were satisfied with the appearance of the ebook, but at least one wasn't happy with the financial aspects. She had only been with them for a short time and has just received her first payment. Unlike most services, she didn't get a statement email; the funds were simply deposited in her bank account.
This author also wasn't pleased with the amount she's earning on each sale. As you probably know, Amazon and B&N offer a couple different commission plans. Price your ebooks the way they want and you will get a larger cut. Unfortunately, it doesn't appear that Bookbaby supports choosing the better plan. I'm told that Bookbaby defaults to the lower 35% commission at Amazon, not the 70% rate.
Update: I now have correct info on the pay rate. According to this author, Bookbaby pays the standard Amazon rates of 35% and 70% (depending on ebook price).
Getting back to the fees, I have to say that I was taken aback when I learned the truth. Once you factor in the added costs, suddenly Bookbaby isn't as good of a deal as it first appears.
The extra fees change the cost structure significantly. Before I would have bet that the $99 could be covered easily in the long run. But now that we know about the yearly fee and the quirk in the payment plan, you have to sit down and do some real math before picking this service.
You can get a basic conversion outside of Bookbaby for $150, and you can then upload the ebooks to B&N and Amazon yourself. Trust me, it's not hard. If you also upload to Smashwords, you can use it to cover Kobo and other ebookstores besides B&N and Amazon.
The question an author needs to ask is this. Will you earn more by going direct than if you go through Bookbaby and pay the $19 fee?
When you phrase it that way, it's pretty simple. Going direct is the better deal. Of course, that is only true so long as Bookbaby doesn't let authors choose the higher rate offered by B&N and Amazon. When that changes I'll need to reevaluate the math.