Engraving wood is certainly the cheaper way to get started and to learn. Small items like wood ornaments make good practice, but will probably not bring in enough money to pay the monthly bill on the laser. They are a small dollar item and if you sell them directly the profit is not bad, but you probably won't sell many. If you wholesale them you might sell more but the profit is much lower.
Specialty items that sell to a narrow market at much higher prices are much more profitable. But until you can build up sales in those markets you wouldn't have enough sales to pay off the laser.
Many people find that doing quantity products is where you can make the money. Doing specialized items for a local manufacturer (either engraving or cutting), by the hundreds or thousands. Or doing promotional items or any other bulk type of order starts bringing in the money at a nicer pace.
And as was said before, a big part of it is marketing. A laser can produce small items fairly fast, but can you sell them that fast? Since the laser is so expensive (figure spending a minimum of $10k for a used one and the other items to get started, or $15k-$20 for a new one, or even higher for a larger more powerful one). Most people calculate that they must charge $1 or $2 per minute of laser time for the laser to be making any money. So if a nice photo on wood takes 20 minutes, you would have to sell it at at a minimum of $20-$40 to make any money. And if you are wholesaling it then the retail price might have to be 2-3 times that. Not an easy sell. Plus you could produce 20 of those a day, but can you sell that many? I could produce about 200 wood ornaments in a 6 hour day, but I can't sell that many each day.
It might be best to spend some time before getting a laser just sitting down and looking at product ideas. The laser is great at engraving certain materials, and at cutting a subset of those materials. But without an idea of what you can manufacture that would sell at a decent quantity and price, or without knowing who might pay for your marking and cutting services, the laser could end up sitting there losing you money.
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