Bookies frame their market based on their personal assessment of each runner, however, this is not what they put up on their boards when comes the time to accept bets. They will put up whatever prices they think the punters will fall for (these prices always advantage the bookie of course) and often these prices are almost identical to the TAB prices of many runners (primarily the more favoured horses as they are often overbet). Also on the longshots a bookie won't generally offer huge odds like you often find on the TAB. Also a bookie is influenced by what prices other bookies put up.
As betting progresses prior to the race, the punters will themselves influence the displayed prices, but if the bookie is doing his job properly and not gambling his market will always be framed so that at the end of the day he's virtually guaranteed to come out in front, even if he loses on some races.
That's my understanding of it.
But I'm not an expert on this rather precise subject.