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Amazing post, Dave, and definitely an important topic. My first book I used one of the larger “editorial agencies” you mentioned. The quality wasn’t bad but there was no direct contact with the editor. Just ship it to them and they ship it back. I’ve tried out several editors now and found a very good one who did a great job on my list book. Once you find a good editor, stick with him/her and build a relationship if you can. Thanks for the list provided and this editors test is a great addition.
That said, I don’t recommend going to publication, particularly if your book is intended as a revenue-generating venture or as a vehicle of professional promotion, without making sure that someone with an eye for detail has gone through the entire manuscript and ruthlessly noted every typo, every spelling error, every misplaced comma, and every ambiguous sentence.
The key historical factor that enabled the U.S. to become a world economic and military power after WWII was government leadership in funding high-risk research and development (R&D) and the education of generations of scientists and engineers. Since 1967 the Federal government has steadily reduced funding in these areas and now is a relatively small player in our national R&D enterprise. This puts our future prosperity at risk. The book goes into great depth as to the factors that have caused this change in government policy.
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.