It's not necessary. I wouldn't say it's the best way to go even if you did have the money.
Let's say you've figured out what kind of editing you want, and also one who is going to work well with your genre and style (all of that is a whole lot of work on its own, but let's just start with that). Then you get the edits back. Which edits will you accept and keep? How will you know when to decide that this is not a good choice for your work? Or maybe an edit indicates there's a problem with some plot point, and it's great that the editor noted that, but their solution doesn't work with what you want for the story?
A big part of the issue here is knowing how to work with an editor. You don't just hand over your work, expect them to find and fix everything and you accept it all without question. But if you don't have enough experience, you might struggle with figuring out how to navigate your choices in managing those edits.
Which is why experience is so very very very important. You'll need plenty of it just to be able to make smart decisions while working with an editor. Editors are not shortcuts.
A really great way to gain that experience is to interact with other writers, critique work, talk about what's going on in your genre, what books are big and what people are loving about them. So the good news, you found that place.
So my advice is to read a lot around AW, and start participating a lot. Especially in Share Your Work. You can learn more from offering edits for other people than you can from paying an editor.
These are great points. In fiction, substantive or developmental or content editing (or whatever you want to call it) is a conversation. You and the editor need to have a certain meeting of the minds for it to work. When you're working with a publishing house, your editor is usually/ideally your acquiring editor, the one who bought the book. So you know that person likes the book, and there's a certain level of trust.
Too often, when people make these blanket recommendations to "hire an editor," they don't specify whether they mean a developmental editor or a copyeditor. Those are two different people with two very different skill sets, addressing different needs the ms. might have. (I do both types of editing simultaneously at my job, but that's a tight-deadline thing, not a great idea for a novel.) If your book has fundamental structural or pacing problems, all the superficial polishing in the world won't do much good.
That may sound discouraging. But I really think that, via interactions and critiques and lots of reading in your genre, of the kind JJ is recommending, you can start thinking like your own developmental editor. When I started trying to market my writing, about 12 years ago, I wrote exactly what I wanted to with very little structure or consideration of reader expectation, and needless to say it didn't work out too well (700-page rambling, genre-less novel in the tradition of Pynchon, anyone?).
What helped me was reading Miss Snark's blog, and then AW. Paying for one critique from a published writer who had teaching experience. And reading a TON of books. No classes, no pro edits, no craft books, no conferences, just me using freely available info to find common ground between my wild ideas and the industry. (Which is an ongoing process, btw.
) But that's just my path. There are many paths to this goal, most of them twisty, and no magic bullets or guaranteed short cuts.
And Harlequin, you make a good point. I do believe that for some novels, some strong and polished novels, there is no feasible path to trade publication in a given market. Other paths might work better, and we're lucky to have those paths available.