I know, from personal experience, that when you’ve queried hundreds of small publishers, hoping someone, anyone, will purchase your manuscript, there is a tendency to just stand up and scream, “Hallelujah! Someone wants it!” without delving further into which publisher is making the offer. Big mistake! There are many types of publishers out there and before you get in bed, so to speak, with a company for as long as 10 years (yup, I’ve seen contracts that asked for that long a commitment!), there are some factors you should consider if you are submitting work without an agent:
What rights is the publisher looking for? Read every word of that contract! How long is the commitment for? I believe 2-3 years is ideal; if you don’t like the publisher, do you really want to be committed for longer? Is the publisher asking for right of first refusal for your next book(s)? You may not want to agree to that until you test the relationship first, with this initial book. Is your name or pseudonym yours or will you be required to use it only with that publisher for the length of the contract? (I had one small press try to smuggle that clause in and when I called them out on it, they just didn’t answer! Needless to say, I passed on their contract!) What rights is the publisher looking for? You might want to retain your film/TV rights or your foreign translation rights.  You might want a paperback version to sign at events (I did!) or an audiobook version—will the publisher in question agree to that? There are a lot of publishers out there, so don’t settle for what you don’t want. And remember, there’s always self-publishing as well!
How will the book be presented? Take a good long digital look at the publisher in question. Do you like their website layout and contents? Does it contain typos? Read some of the books they publish. Have they been well-edited or are they ridden with mistakes? Do you like their covers? Would those covers entice you to buy their books? Remember, this is the team that will be editing and designing your book!  A big percentage of why you’re sharing your royalties with any publisher is for their editing and cover design skills. Are they worth what they are charging in terms of royalty split?
Is this an easy publisher to work with? Are they responsive? Honest? Are they paying their authors? The great thing about the digital age is that you can read about fellow writers’ experiences with various publishers at sites like  http:///www.absolutewrite.com.
How is their marketing? Along with editing and cover design, the other thing you are paying for by sharing your royalties, is the publisher’s marketing acumen. Study their recently released books’ rankings on Amazon. Are they in the 100,000’s or the millions? (Hint—lower is better!!) Take some of the titles and google them to see if they’ve been written up in any review blogs or author interview sites. A publisher who can’t get you press isn’t doing what you’re paying them for; you could be better off publishing on your own.
Finally, what are their terms? All things being equal, you’re looking for who’s paying you the most with terms most favorable to you!

And remember, intellectual property attorneys are your friends. It could be worth a few hundred dollars to make sure that the contract you plan to sign won’t end up being something you’ll regret months later. Good luck and happy writing!