Marketing Strategies and Print Efficiencies - Best Practices
by Stephen Lett
Catalogers, like you, always want to know what can be done to maximize printing, paper and mail distribution programs. This is relevant topic especially due to raising paper and postage costs. This month, I want to discuss effective ways to reduce your costs and to stretch your direct selling dollars. The cost that you pay your printer to print your catalog pales by comparison to the amount you spend for paper and postage. I hope my ten money saving tips will help you.
PRINTING EFFICIENCIES and EQUIPMENT
- Traditional Web Offset Printing - The two things that matter most are page count and print quantity. Page count and the printing press being used to run the job determine the number of press forms required. The more press forms, the greater the cost. A 32 page or a 48 page press forms are the most efficient to print. (While these page counts are efficient for the press, a 32 page book is not efficient from a postage standpoint because it does not maximize the postal piece rate discussed later.) Tip #1 – Utilize the fewest number of press forms possible; one press form is the most efficient to print. Running 48 pages on two different weights of paper is less efficient. A 48 page catalog can also be produced using a 32 page press form on one basis weight of paper and a 16 page press form on a different basis weight requires two forms which adds to the cost. Tip #2 – Keep the paper weight and grade the same for all pages throughout the run. There might be a need to run the cover on a heavier stock for “feel” to the hand. Typically, the inside body pages are on a lesser weight of paper. Try not to print an 8 page cover (even if your catalog qualifies for the piece rate). Tip #3 – Restrict the covers to 4 pages (not 8 or more). There are differences between double vs. single web printers. There is more flexibility with page count/basis weight combinations with a single web printer. Catalogers should know the press equipment being used in order to take advantage and the various efficiencies.
- Print-on-Demand – This technology has come a long way. But, it is not an option for catalogers, at least not now. Print-on-demand is used for very short runs, i.e., 500 copies or less. Applications for this are journals and books (short runs only).
- Non-Catalog Printers – I want to stress the importance of printing with a company who specializes in printing and distributing (key word) mail order catalogs. Smaller catalogers are often tempted to entertain quotes from local sheet fed or web printers who have no ability to penetrate the USPS (United States Postal Service). Lots of printers do a good job putting ink on paper. However, mail distribution is of upmost importance today and local sheet fed and/or web printers simply cannot compete. Typically they truck the catalogs to a local letter shop facility who ink-jets the back cover only (the catalog cannot be ink-jet imaged once it is bound) and distributes the catalogs through their nearest bulk mail facility or post office. They cannot take advantage of co-mail opportunities (discussed later in our column) or other postage discounts granted by the USPS for mailing “deep” into the postal system. Again, make sure you print with a catalog printing company. Tip #4 – If you print more than 100,000 at a time, be sure you are doing business with a known catalog printer who also has the capability to distribute the mail deep into the postal system. I often receive calls from small sheet-fed or web printers who want to submit a quote. My first question is, “tell me about your co-mail and drop-shipping mail distribution program”. The phone goes blank at that point … they haven’t a clue!
Catalog companies had to deal with three price increases in 2007; July 1, October 1 and December 1. Today, catalogers are paying approximately 20% more for paper than they did one year ago. Paper represents over 50% of your total printing costs therefore the impact of these large increases is difficult to absorb. Tip #5 - If you purchase more than 80,000 pounds (about two truckloads) of paper at a time, you should consider buying your own paper from a well known, respected merchant. This would be the equivalent of printing approximately 300,000 catalogs, 64 pages with a trim size of 8” X 10 ½” on 40 lb., paper as a guide. Paper and freight are two profit centers for printers and something catalog companies understand the least. Reasonable savings resulting from purchasing your own paper range from 4% to 6% or more. Informing your printer that you are considering buying paper from a merchant will often result in a cost savings for you, the mailer without changing a thing. This can spark lower paper consumption requirements and a lower cost per hundred weight (cwt). Most of the savings results from paper consumption percentages. Typically, I see under consumption in the range of 2% to 3% which will go back to a company’s inventory if the purchase their own paper. However, if the printer purchases the paper, any overage will be put back into their inventory to be sold again to another cataloger. Again this is a potential profit center or cost saving opportunity depending on your perspective. A merchant might offer you a price cap which is not something I recommend taking advantage of. Often the merchant will set the cap high to be certain they are price protected. This can be an expensive insurance policy. It sounds good but it’s not really practical or necessary. Currently the paper market is extremely tight. It is not just a matter of price but availability. Tip #6 - If you are not buying a substantial tonnage of paper, i.e., 500,000 lbs., at a time, you may not have the leverage with the mill your printer does.
Handling Fees – Check to be sure your printer is not going to charge you a handling fee if you supply your own paper. Some printers do, others do not. A handling fee of $.50 cwt (Per Hundred Weight) can add up to thousands of dollars annually. These fees are open to negotiation and most printers will waive this charge; we know two catalog printers who currently do not charge any paper handling fee.
Paper Options – There has obviously been a trend towards lighter weight papers to reduce paper and postage costs. There has been a move by some business-to-business and lower ticket consumer catalog companies to use super calendered paper which costs 15% to 20% less than coated paper. This is always an option but be sure to take your product offer into consideration before you change paper grade or weight. DO NOT make the switch from coated paper to super cal without doing an A/B split first in order to determine the effect on your response rate and average order size.
More than 50% of the cost to print and mail a catalog is postage. Therefore, the distribution of the printed catalog into the USPS is critical to your costs. In this section, I want to talk about pound vs. piece rate catalogs as well as “Slim-Jim” formatted catalogs (which mail at the letter rate). I also want to discuss co-mailing which represents a significant cost saving opportunity to catalogers today.
Piece Rate vs. Pound Rate – A catalog weighing 3.3 ounces or less can qualify at the postal piece rate. If the catalog exceeds the maximum weight limitation, it must mail at the pound rate which is higher. For example, a 72 page catalog measuring 8” X 10 1/8” with 64 pages on 30 lb., paper and 8 pages on 40 lb., paper with no bind-in order from could mail at the piece rate. Increasing the page count to 80 pages or using a heavier stock will cause the catalog to mail at the pound rate increasing the postage costs approximately 10%. A 64 page catalog with 48 pages on 34 lb., paper and 16 pages on 40 lb., paper will also mail at the piece rate. Tip # 7 – Move to a lighter weight stock in order to reduce the weight of the catalog to qualify as a piece rate catalog. Or, you can make a slight adjustment to the trim size to accomplish the same.
Slim-Jim Catalogs – Catalogers are experimenting with this format in order to lower their postage costs. A Slim-Jim catalog needs to weight 3.0 ounces or less and have at least a 50 lb., text basis weight on the outside 4 pages in order to qualify at the letter rate. To qualify as a Slim-Jim the catalog needs to measure 6 1/8” X 10 ¾”. A 64 page Slim-Jim with 48 pages on 38 lb., and 16 pages on 50 lb., will cost less than a traditional catalog to mail by approximately $50 per thousand or $.05 per book. It includes 4,214 square inches of selling space and weighs 2.88 ounces. The cost to print, bind and mail is approximately $.46 each based on a print run of 500,000 copies. Before you jump to this size for the savings, you need to understand that the catalog must be tabbed or wafer-sealed to qualify for the postal savings, i.e., the letter rate. Having to break that seal or tab has been known to reduce the response rate in the consumer market by up to 7%. Tip #8 – Be sure to test the Slim-Jim format against the trim size you are currently using before you make the change. There is a market for Slim-Jim size catalogs particularly when selling business-to-business. Tip #9 – Ask your printer to quote a Slim-Jim and traditional size catalog, both with the equivalent square inches of space. While the Slim-Jim will cost less to mail, the standard format may be more efficient to print since fewer pages are required to get the same square inches of selling space. The printing savings might more than off-set the postage savings.
Co-Mailing - Co-mingling or mailing is the process of combining different catalog titles into one mail stream in order to generate more carrier route discount mail. There are two types of co-mailing; in-line and off-line. In-line co-mailing takes place on the bindery line and the catalog can be ink-jet imaged both inside on the order form and on the back cover. Off-line co-mailing occurs after the catalog has been bound and only the back cover can be ink-jetted. In-line co-mailing requires a minimum quantity of approximately 1,000,000 with a quantity of at least 200,000 from each of the participating catalogs. Off-line co-mailing benefits smaller mailers mailing 50,000 books or less per title at a time and a pool of 500,000 plus or minus. For example, 10 different catalogs of 50,000 each might go together for a combined co-mail pool of 500,000. Ten to 20 different catalogs can mail together off-line savings approximately $.04 per catalog each. Catalog printers have worked very hard to co-mail. They have had to invest in expensive equipment in order to offer this service so that you, the mailer, can reduce your postage costs. In the beginning, co-mailing was only for larger mailings. Now offline co-mailing is for all mailers regardless of the quantity mailed. Tip #10 – Push your printer for co-mail opportunities and if they cannot co-mail find a printer who does. There are less variables, i.e., trim size, ink-jet location, etc., with off-line vs. in-line co-mailing programs.
In summary, a typical 64-page catalog 8 ½” X 11” costs approximately $.60 per book (depending on the quantity). What makes up this cost? Printing and Paper accounts for $.23 of the total cost and postage is in the neighborhood of $.32 per book. Both together total $.55 each. The remaining $.05 is for the ink-jet addressing, merge-purge expense and bind-in order form. Postage accounts for over 50% of the total cost to print and mail a catalog, up from about 40% just two years ago! By sure you print with a company specializing in the printing and mail distribution of catalogs. If you are going to purchase your own paper, be careful. And, be sure you participate in a co-mail pool in order to reduce the amount you pay for postage.