With my first novel, LEVERAGE, (which had more editing passes than any of my other books) I edited using paper copies printed on 8.5 x 11 letter-sized paper. I was going to Post and Package, in fact, and using their copier to print the book, because I decided it was cheaper than printing on my home inkjet printer (ink cartridge cost driven).
When I published LEVERAGE, however, all that changed.
That novel, and all my subsequent books, have had published paper copies that are produced by CreateSpace, a print-on-demand book supplier (they were purchased by Amazon, but started as an independent company). It didn't take me long to realize that I could format my documents for CreateSpace from the beginning, and print a proof of the book, having it delivered to my door for around $10. That was a quarter of what I was paying to print on standard printer paper.
In addition to the lower cost, editing from these proof pushed me to work on the front and back cover concepts, book front matter, author profile, etc., much sooner than I would have done if I was doing things the old way.
Today, my editing cycle includes a read-through of the book's proof accompanied by the many notes and corrections I put in the margins as I go. I also make a list of major issues or concerns on the inside cover. Then I start actually changing things in the computer file, starting with big picture corrections from the inside cover list. Next, I input my corrections from the proof's margins one scene at a time, and finish this off by reading the finished scene out loud (this helps me a lot with the missing/extra word problems that seems to multiply during editing like rabbits).
When I finish going through the entire book like this, I review the "major issues" list to make sure I feel they were adequately addressed.
I normally complete this editing process three times before I send the book off to an editor. On the first pass, I tend to focus on major plot issues and character motivation. In the second pass, I focus on character and character development and also try to make sure descriptions of people and places are adequate (an area where I tend to skimp). The third pass usually focuses on descriptions, transitions, and flow.
Since each round of editing actually includes two sets of reading and making changes, I am actually going through the material 6 times before the editor gets it. After editing (which includes a similar pass of corrections and reading aloud), I ask a proofreader to look for errors and correct them. Counting the first pass, I go through the material 9 times.
Which takes a long time.
I often wonder how other writers handle the same processes.