What’s Included in The Cost to Print and Mail a Catalog
What’s included in the cost to print and mail a catalog is often referred to as Direct Selling Expenses. We recommend companies break out these costs on their income statement so that the Direct Selling Expense to Net Sales ratio is visible. For a consumer catalog company, this ratio will typically range from 25% to 35% or more. For a business-to-business catalog company, this ratio is much lower ranging from 18% to 25%.
Let’s look at what line item expenses make up Direct Selling Expenses. Obviously, print manufacturing, paper and postage are the largest expenses in this category. However, there are other Direct Selling Expenses such as catalog creative costs, prospect lists and merge/purge or service bureau expenses. Here is an example of the typical ratios you might expect:
|
Catalog Creative & Pre-Press |
4.4% |
|
Print Mfg. & Inkjet Addressing Cost |
22.0% |
|
Paper |
28.4% |
|
Postage |
40.7% |
|
Prospect Lists Cost |
3.7% |
|
Service Bureau - Merge/Purge |
0.9% |
|
Total - Direct Selling Expense |
100.0% |
Here is a graph that clearly shows the allocation of these expenses:
Printing and paper costs represent 50% of your total Direct Selling Expenses. Postage accounts for over 40%. Paper and postage are the two largest dollar expenses accounting for almost 70% of the total. The expense ratio for prospect lists will vary depending on how much prospecting you elect to do. For example, if you are aggressively prospecting, this ratio will increase. If you limit the amount of print catalog prospecting you do, this ratio will be reduced. The ratio in our example above is conservative. Creative costs are generally less than 5% of your Direct Selling Expenses but can be more if you use an outside firm to design and produce your catalog. Service Bureau expenses for list hygiene and merge/purge processing represent the smallest expense category.
Based on this chart, you can easily see the importance of controlling your paper, printing and postage costs. The decisions you make regarding print quantity, paper weight/grade and mail distribution, i.e. co-mail, will factor into your costs. Keep your Direct Selling Expenses in check by printing and mailing smart.