One of the biggest arguments I get from potential customers is “why should I pay you to convert my ebook file when I can just submit a Word document to Amazon or Barnes & Noble?”
Amazon & Barnes & Noble do auto-convert Word documents (and pdf’s), but I don’t trust work done by machine converters. How good a job they do depends on how closely your formatting matches the formatting the converter was programmed to handle. The SmashWords Style Guide contains 130 pages of instructions for getting a manuscript through their own software converter and getting it to come out readable. And in the end, that guide says there is a good chance that all that work will still result in a bad conversion, and to plug the entire thing into notepad to start over. Heck, their software didn’t even format their own style guide right!
Have you ever tried plugging a long passage of text into a software translator, like Google Translate? The result is often words in the wrong order and untranslated words tucked inside. This is because fluent speakers almost never speak the “proper” version of their language. It winds up being the old GIGO routine. A favorite quote of mine on this topic: Computers are stupid. They don’t do what you want them to do. They only do what you tell them to do.