Okay so I am new to a bass boat. I was talking with some friends and one pointed out that my cavitation plate is about a inch above my chines. My questions is that is it worth spending $500 on a jack plate? Is my performance going to differ that much???
A lot depends on your setup as to whether a jack plate will be beneficial or not. The boat must be able to have the right weight balance with the engine set further back. Boats designed for a 2 stroke engine and using a 4 stroke might not balance great and a jack plate will just make it worse. Bass boats typically are less sensitive to this than center consoles.
Best bet is to look on some other forums and try to find someone with a similar setup using a jack plate, try to contact them and find out how it performs, or if a dealer has experience with a similar set up.
A jack plate can help dial in the best engine height, which may be different depending upon water conditions and helps the engine run in less disturbed water. Usually not night and day differences, but can make noticeable differences.
OK, never heard anyone describe motor height in relation to the chines but your cavitation plate should IMO be 1/2" to 1" above the lowest point of the transom when mounted at it's lowest position. From this position adjustments can be made upward if needed. You have failed to mention how the boat rides. You seem to be concerned because a friend made a comment. If the boat rides fine where the motor is...who cares what your friend thinks.
A jackplate isnt a necessity but is a tool used to get the most of out your boat. By adjusting motor height, you can fine tune the handling characteristics, improve holeshot, top end speed ,control chinewalk, and adjust RPMs for optimal performance (motor too high, you over rev, blow out and may not get enough water in the engine, too low and you lug the motor). Every hull design, load and prop combination might perform at their best at a different height setting, therefore there is no universal perfect setting, it takes some experimentation to get it just right. An average Joe with a 20 ft Ranger who weighs 150 lbs and carries 3 rods and a bag of worms and runs on fumes would use a different setup than a tournament angler with the exact same boat/motor who carries a full fuel load, full livewells, power poles, a co angler and 1/2 of bass pro shops A 250 hp motor on a light hull like a Bullet or Allison would be set up different than it would on a heavy boat like a Ranger.
Most of the time when talking about setup and motor height, measurements are prop to pad which would be measured from the lowest point on the pad (running surface) to the center of the propshaft when the boat is level and the prop shaft is level. 3" below pad is usually a good starting point, raising or lowering in 1/4" increments. Make note of your max RPMs and water pressure, RPMs should be within the range recommended for your motor, water pressure should be a minimum of about 15 PSI at WOT.
Before you consider adding a jackplate, take a look at which mounting holes are used for bolting your engine to the transom.. you may be able to simply move the engine up a hole or two in order to achieve what you want...often, engines are mounted low from the factory (mine was)... also, $500 is only going to get you a basic jackplate vice a hydraulic plate that is adjustable while you are running... Lastly, I think the advice Neilslure gave you in regards to pad/prop shaft is spot on... Overall, though, I have an Atlas Jackplate and really like it for my needs.