I hope this helps! Please don’t be discouraged by editor’s rates. Many of them do this full time or to supplement their other income with their business. The quality of service is not necessarily tied to project cost, but hiring anyone who is a contractor or freelancer often means you’re getting one-on-one personalized attention you might not get if you worked with, say, just the editor of a publisher who could see your book as a quota to fill. Just my two cents!

The single most decisive factor should be the quality of the edit itself: Will this editor help improve your book? In order to assess this, nothing beats a sample edit (even if you have to pay for it). Testimonials and credentials (such as experience at a major NY publisher) can help you narrow your list, but you should submit the same sample to a variety of editors and compare their work side by side. Some editors will push too hard, and some won’t push hard enough; some will simply “get” your writing, while others will seem to speak another language entirely. In my experience, the editor’s résumé is far less revealing than the quality of the sample edit. In fact, the higher an editor’s pedigree, the more reluctant the editor might be to provide a sample edit. Don’t be afraid to insist: no one should expect you to invest in a car without a test drive!
As a freelance editor, I would like to express my strong disagreement with the idea that a freelance editor must work as an employee of a publisher for three years to be any good. In my field, spirituality, many publishers have gone to having most editorial tasks beyond acquisitions performed by freelancers, so the in-house positions being held out here as a prerequisite for freelancing simply don’t exist; many editors must cut our teeth as freelancers. It also occurs to me that self-published authors usually bristle at the idea that they are not “real” authors unless their work is accepted by a commercial publishing house. Is it fair to apply this standard to the people they propose to employ as editors?
Great advice, especially the painting analogy (clever!). I also enjoy your YouTube videos, which I found out about through Publishing Perspectives ((nice!). http://publishingperspectives.com/2015/08/ready-for-your-close-up-what-youtube-can-do-for-writers/ I agree that most developmental editors are more like therapists than surgeons, but there are book doctors out there who will essentially rewrite your manuscript (they’re one step away from ghostwriters, I feel). Also, I don’t actually offer sample edits, but this has nothing to do with pedigree. It’s more that I’d rather not mark-up a manuscript unless I’ve read a good part of it (at least 50 pages). I believe that most copyeditors offer sample edits,… Read more »
I’m not sure why you said “ha” after Fiverr. I’ve been a proofreader (more like a line editor/copy editor, really) for 3.5 years and have worked on many book projects there and outside of Fiverr. (writerkerrie) … Yes, some editors on there are crap and I agree, but many of us ROCK! I only charge $5 for 1,500 words of text (I only receive $4) because I LOVE WHAT I DO and I love working from home and being able to homeschool my kids. I am also an author myself and want to help other authors by not overcharging them. I have received MANY book projects from authors who paid the rates you describe above and I ended up finding DOZENS more mistakes and GLARING errors that for $70/hour … well, they should have been caught. Please don’t write off Fiverr. Some of us care about what we do and we do it well and you can tell from my almost-1,600 great reviews that this is true. Don’t hire someone if their gig is written poorly and they barely have any reviews!
Regarding your last question, I know of no editor who gives a money-back guarantee for occasional errors that happen to slip through or for a different opinion by a later editor. I’m afraid such things are just the nature of the publishing beast. But by having a shorter portion edited first, you will get a decent feel for whether someone is the right editor for you, and will be able to be confident in his or her work on your entire book.
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