You lose a TOTAL of 3% of your level, each and every time you die.
* You lose 1% of your level permanently (cannot be restored by soul healing)
* You lose 2% of your level that can be restored by a soul healer
If you reach 25% of your level to be soul healed, each time you die after that you will lose all 3% of your level permanently. This is why the cost caps out and after dying a lot it will not cost you more and more (because that experience is permanently lost).
When you permanently lose the xp, can't you just go complete some quests/kill some mobs and gain it back?
Yes, but you cannot soul heal the lost exp back. Basically what this means is that there is a REAL penalty to dying, rather than believing soul healing and kinah can make up for all your deaths.
1% is not a lot!
If you need (xp):
1,000,000 = 10,000 xp lost. This is the equiv of killing 1 mob in most cases. And it does not scale much. However if you KEEP dying and you DO NOT soul heal, you will begin to lose 3% total, which does add up.
What does this all mean?
You can die roughly 8 times before you max out on soul healing costs and losses.
Deaths beyond 8 will cost you no addtional soul healing cost but loss of experience that you need to grind/quest back.
If you are poor and you die a lot, you need to use your judgement on when to soul heal and when not to so that you minimize cost and how much combat you need to participate in before dying further.
If you are rich, just soul heal before you hit 8 in a row. Or whenever you feel like it.
If you are poor but are not dying left and right, soul heal when you can afford it before 8 deaths.