Printing And Paper Efficiencies That Will Save You Money!

by Stephen Lett

In this day and age of rising costs and lower than expected response rates, it is important to know how best to maximize your catalog print manufacturing, paper and postage efficiencies. These costs represent, on average, approximately 80% of total catalog selling expenses and approximately 20% to 25% of net sales. This month, we will consider various printing and paper cost options that can reduce your costs while you maximize page count. In other words, we will look at ways to stretch your catalog expense dollars!

We have always emphasized the importance of maximizing page count. Pages DO increase the amount of revenue generated per catalog mailed. Rule of Thumb: The revenue per catalog mailed will increase at one half the percent increase in page count. For example, if the page count increases by 20%, the revenue per catalog will increase by 10%.  Therefore, assuming there is plenty of “good” merchandise to sell, adding pages makes good economic sense. Adding pages while making certain that the paper and press manufacturing are efficient can lower your incremental breakeven point while increasing revenue... a real win-win for you!

Our main objective this month is to illustrate how various printing (page count) and paper combinations and/or options can help reduce your costs and save you money. Our focus is on print manufacturing, paper and postage.  Our goal should be to add pages to the catalog as economically as possible. In order to accomplish this goal, we need to be aware of the weight minimum for the standard “A” postal rate which is 3.3 ounces. A catalog weighing less than 3.3 ounces can be mailed at the minimum postage rate. A catalog weighting over this amount must be mailed at the pound rate. As the weight of the catalog increases over 3.3 ounces, i.e., more pages equals more weight increasing the unit cost of postage. We always want to maximize page count without increasing our postage costs when we can do so. Once we are required (by weight) to mail at the pound rate, using the right paper and page count combination can help minimize the increase.

We want to be concerned with the Per Page Cost of the various page count and paper weight options. Leverage means being able to increase pages without proportionally increasing costs. As the page count increases, the paper basis weight should be decreased. This will minimize the weight of the catalog while yielding more square inches of selling space.
Please refer to charts #1 and #2. These figures are based on 1,000,000 catalogs (8” x 10 1/8”) with the use of a bind-in order form envelope.  I have given page options from 48 to 80 that offer clear alternatives:

Chart #1 – 48 to 80 pp. on 50 lb. #4

#PP Paper Paper Cost Printing Cost Postage Cost Total Per Page Cost
48 50 lb. #4 $105/M $65/M $265/M $435/M $9.06/M
56 50 lb. #4 $122/M $71/M $294/M $487/M $8.70/M
64 50 lb. #4 $139/M $77/M $328/M $544/M $8.50/M
72 50 lb. #4 $156/M $83/M $360/M $599/M $8.31/M
80 50 lb. #4 $173/M $89/M $390/M $652/M $8.15/M

 

Chart #2 – 48 to 80 pp. on combinations of #5 coated with most pages on lighter weights to minimize postage costs.

 

#PP Paper Paper Cost Printing Cost Postage Cost Total Per Page Cost
48 38 lb. #5 $75/M $65/M $261/M $401/M $8.35/M
56 38 lb. #5 $87/M $71/M $261/M $419/M $7.48/M
64   8/38 lb. #5
56/34 lb. #5
$99/M $77/M $261/M $437/M $6.83/M
72   8/38 lb. #5
64/32 lb. #5
$111/M $83/M $270/M $464/M $6.44/M
80   8/38 lb. #5
72/32 lb. #5
$123/M $89/M $279/M $491/M $6.14/M

Let’s take a look at what these charts actually illustrate. In chart #1, the page count is being increased from 48 to 80 pages but always on 50 lb., #4 grade paper. The weight of the catalog in all of these page count options is over 3.3 ounces which means the catalog will have to be mailed at the pound rate resulting in additional postage cost. In chart #2, we can mail a 48, a 56 or a 64 page catalog at the minimum postage rate since all of these combinations weight less than 3.3 ounces. Note here that we have switched to 38 lb., #5 grade paper for the 48 and 56 page books. If we are willing to alter our paper requirements using a combination of 38 lb., paper for 8, pages and 34 lb., paper for 56 pages, we can increase the page count all the way up to 64 pages without exceeding the 3.3 ounce weight restriction for piece rate catalogs. This provides a great deal of cost leverage and it greatly reduces our breakeven.

In our examples, the cost per page for a 64 page catalog printed on 50 lb., #4 grade paper is $8.50 compared with a cost of $6.83 per page for a 64 page catalog printed on a combination of 38 lb., (for 8 pages) and 34 lb., (for 56 pages) paper. By changing the basis weight of the catalog, the cost per catalog page has been reduced by $1.67 which represents a 19.6% cost reduction. On a run of 1.0 million catalogs, we can save, in real dollars, a total amount of $107,000* by making this change to a lighter weight paper combination. Assuming a 6% customer return rate and a 55% gross profit margin ratio, our incremental per page breakeven point is reduced from $17,347 to $13,935 for a reduction of $3,412 per page. A reduction of this amount can greatly increase profitability.

It is generally most efficient to print in 16 page (or at least 8 page) sections and with one weight of paper if possible. For example, you could print a 64 page catalog with 2 press make readies (2 – 32 page sections) more efficiently than you could print a 44 page catalog (requiring 3 make readies).

As you can see from our charts, it is possible to circulate the same number of pages (or more) for less money. Unless your product presentation requires top grade paper, which most do not, substantial money can be saved by altering paper and print manufacturing combinations. Ask your printer for cost saving options. And, be aware of the 3.3 ounce maximum weight limitation for mailing at the USPS piece rate. If you are not certain what the impact of this type of change will have on your results, test different paper weight and grade combinations first. Remember, as you increase pages, you should consider reducing the basis weight of the paper you are using in order to reduce and to leverage or costs.

* 64 pages X $544/M X 1.0 million copies = $544,000 and 64 pages X $437/M X 1.0 million copies = $437,000. ($544,000 - $437,000 = $107,000 or 19.6% savings.)