I've been doing this for a good chunk of years. I've done the books I've wanted to do. I've made, what I consider to be, a lot of mistakes. I certainly haven't made much money. The most money I have made is from tax write offs (computer, paper, half my hobby stuff, all my roleplaying books and the yearly trip to gencon).
I imagine publishers make more money. I'm very serriously looking at that at this point, with some experience under my belt. If you haven't done this before though I would freelance for a bit, and then try becoming a PDF publisher if that's what you want to do.
You can make money but it's hard to do. I've worked for about 14 publishers and 6 of them went out of business. Many published their "one" book, or serries and then just stopped.
I think The Le Games is a good model of a successful PDF publisher and I'd go talk to `Le about it. He's in a small time industry and he's trying to be successful at that level. His products are very efficient. He uses the resources he has very well. I went out and got the latest Indesign, Acrobat and bought advertising - although these things were good, there are much cheaper and more efficient ways to get stuff done - Open Office for example.
The PDF market is really cool because you can litterally make products without spending any money. You add to the project what you are capable of doing and offer royalties for everything else. It's a way to start. From there, you can invest in your company or use whatever income trickles in to upgrade. Cover art is a good investment,
IMHO.
Mark Charke