I have published a few things, in and out of my usual genre, and I have always been surprised at the number of contests out there, and the willingness of people to enter them.
The entry fee thing reeks of academia, to me, and the influence of academia. Not a terrible place to be, but not exactly known for business sense and fair practices.
The question to ask before entering any contest is simple: If I saw a winner of this contest's book or story somewhere, would I make a point of reading that work because of the award?
There are very, very few awards that actually have that outcome for me, as a reader, and even fewer that influence the general book-buying population. Even fewer, still, the number of editors who would likely be influenced by any award that isn't appealing to the book-buying population.
Nobel, Pulitzer, Booker, and...? Hugo? Maybe a Hugo?
Until I can enter the Pulitzer for an affordable fee, I'll avoid paying any fees for contests.