Smashwords.com is a company that allows authors to upload and publish their e-books. It is a free service. They will not only convert your original manuscript file into various e-book formats, but will distribute your book to almost every major e-book retailer. You only pay a fee when your e-book is sold, and even then the percentage taken is shockingly small by book industry standards. If any of your e-books are sold (either at Smashwords itself or through any of the outlets such as Diesel, Apple, Borders, Barnes & Nobel, and others) you will receive up to 70 percent of the asking price. This is many times higher than what you would be paid by a publisher for a hard copy of your book.
How much do e-books cost? As the author, you decide, but remember; unless you already have a large following, the cheaper the better. Many e-books are free. In fact, I published a small pamphlet of my late father's poems and made them free to anyone who is interested. Unknown authors who are not financially strapped can make their e-books free simply to garner an audience--many broke readers frequently troll through the "Free" section of Smashwords. I have seen at least one author who published his first book for free, then charged a fair price for the sequels. But most e-books are not free. Most titles on Smashwords run from 99 cents to $4.99, although I have seen some for as much as $9.99. They even have an option where you can allow your readers to pay what they think your book is worth. It is called "You set the price." On one hand, this seems to be an ideal way for the higher quality books to command higher prices, but my guess is that authors get pretty low prices for any of these, quality or no. It is an interesting concept, though.
So most e-book customers have a choice in format. Visit Smashwords.com and select any book in its library and experiment with the various formats. Samples are almost always available for any book, and samples are always free.