The borrow rate is calculated by:
(the borrow pool) / (total number of borrows). You then multiply this by how many borrows you got for all titles that month, and that's how much Kindle pay you.
Popularity, price, etc play no part. So a borrow on a 99c short story in December is worth $1.88, and a borrow on a $9.99 compendium in December is also worth $1.88.