1) Paying vs TFP (free): If a photographer is willing to shoot your headshots for free most likely they don't have much experience doing Headshots. So be ready to have your agent ask you more more and more photos. Does not mean that all paid or high priced photographers are good either. Do your research and look at portfolios.
2) Current trend in Actor Headshots (Hollywood / Los Angeles): Casting agents change trends change every 10 years or so in Hollywood. At the moment it is a color photo, below the shoulders, top of the head cut off, background blurred (done by the photographers camera settings...not bin Photoshop), sharp eyes, and strong contrast.
3) Drive to get the best: Just because they are in Hollywood or Beverly Hills does not make them the best for you. Do your research and look at portfolios.
4) Outfits: Choose outfits that you usually wear to auditions and know your character types. If you look like a jock bring a white tank top and maybe some other tight fitting shirts. If you go out for girl next door then bring some cute ruffled tops. Plan your outfits and bring plenty of extra cloths for safety.
5) What is too much to pay? That is a good question. Photographers are like celebrities the more popular they get the more their price goes up. Mainly because they get busier and busier as their popularity increases. Does not make them better then some others... just more famous. Casting directors do not know how much you spent or who you went to, so do your research to find the biggest bang for the buck. Also look for special deals and seasonal specials. But do not use a point and shoot either. Unless you are at least a semi-professional photographer with the right equipment your photos may not even make it to the casting table. Armature photos will often be tossed or ignored online by the casting assistant.
6) Retouching: Please be careful here actors. As a professional retoucher as well as a photographer, I have had the craziest requests from actors wanting to over-retouch their photos. HUGE NO NO! You will get sent home if you don't look like that photo. The retouching should be so minimal only taking out your biggest flaws and making the image pop on the casting table. I charge $30 to retouch a printable headshot. If I shot the headshot then usually about $10.
7) No No's: Colored contacts. Have a retoucher change the eye color if you have colored contacts. Colored contacts cover the eyes and do not let them shine and reflect correctly. It's very easy to change eye color in Photoshop to match your contacts. Glasses. Pop the glass out of your glasses and just use the empty frame to avoid the awkward glare that glasses give. If this will not work, just go to the drug store and get some cheep plastic glasses you like or that match yours, pop the glass out and use those in your photos. Don't model. Be natural and relaxed in your headshots.