An image processing apparatus executes an area dividing process on color image data that have been divided into blocks of a prescribed size, and for each block, selects a three-color mode when tone gradation is of higher priority and a four-color mode when resolution is of higher priority, as a color mode for an area averaging process. The image processing device executes a compression process in the selected color mode block by block, and outputs image data in a data format of 256 bit length, regardless of the color mode for compression.