How to Save Printing Costs in 2010

Retailers and catalogers are looking for big cost savings from their printers in 2010. The biggest potential savings will come from maximizing co-mail opportunities. The bottom-line issue is cost savings, and printers give mailers Rube Goldberg-types of cost analyses that are impossible to follow. Mailers are having success, however, at dumbing down co-mail comparisons and getting printers to boil co-mail costs down to the two checks necessary for co-mailing — one to the printer and one to the USPS. This allows mailers to compare who has the best program.

Co-mail programs aren’t just for catalogers. Retailers who produce catalogs, collateral and multiple-page sales fliers can now qualify for co-mail pools as printers build in variable trim size technology to their binderies. Co-mail programs are based on combining several mailings into a single mailing to capture postage discounts from saturation mailing. Retailers are viewed as valuable participants because they often provide good penetration of carrier routes around their store areas, thereby providing a base for other mailers to ride along.

The expansion of co-mail programs, combined with falling printing prices, means that retailers and catalogers have the opportunity to substantially cut their postage costs in 2010 by getting comparable printing and co-mail costs from several printers.

Catalogers spend the majority of their budgets on printing, paper and postage. The biggest savings catalogers can find is in choosing the printer with the best co-mail partnership.

Big savings potential exists from finding the best co-mail pools. Mailers report savings of up to 4 cents/catalog from co-mail. A savings of 4 cents/catalog translates into $4,000 over a mailing of 100,000 catalogs, or $400,000 over an annual circulation of 10 million catalogs. Moving from a co-mail program that yields 2 cents/catalog in savings to 4 cents/catalog in savings will yield $200,000 in cost savings for a mailer with an annual circulation of 10 million catalogs.

Co-mail programs are evolving: Printers and mailers are moving from in-line co-mail programs where the printer arranges for two to four partners to off-line co-mail pools with many more partners. While in-line pools work well for some mailers, off-line pools typically offer more savings. Printers profit from arranging co-mail pools and are increasingly moving toward building off-line pools.

How do off-line co-mail pools work? Printers bind catalogs so the co-mail ink-jet line takes the bound catalogs and ink-jets the name and address on the back cover. Off-line pools max out at around 2.5 million to 3 million catalogs. At that size, there's not much more incremental carrier route discount to be found by building out larger pools.

Printers can run ink-jet lines at about 20,000 catalogs per hour, so an ink-jet line can deliver up to 400,000 catalogs per day and build a pool of 2 million in about five days. Once a pool is built, printers start building the next one. So printers or consolidators need to have sufficient volumes of catalogs to efficiently feed the weekly pools they're building. Some printers truck catalogs from a number of plants to feed their co-mailings, while others have sufficient capacity in a single plant to build large weekly pools.

How do you determine a printer’s potential co-mail savings? Parsing out co-mail costs and postage savings can be difficult using printers’ worksheets. Printers use different formats for outlining costs and savings, making it almost impossible to compare printers’ and postage costs. Ask your printer to distill its costs down to two basic components:

1. The costs the printer will charge for co-mail. This includes all charges — e.g., freight, mail tapes, administration and demographic binding — other than printing, paper and basic bindery setup and running charges.
2. The estimated postage cost. It should be as simple as having your printer estimate the two checks you're going to write: one to the printer for co-mail costs, the other to the USPS for postage.

Generally, mailers compare their actual postage costs vs. a competing printer’s estimated postage costs. To get the best estimate possible, either share your mail tapes from a previous mailing with a competing printer so it can see which pool you'd participate in, or send future mail tapes to a competing printer to have it estimate your postage on a future job. Printers will ask for actual mail tapes to estimate your postage; be prepared to share that data. Printers also will sometimes guarantee a floor savings from co-mail. It's appropriate to ask for both an estimate of postage costs and whether the printer will guarantee some or all of the potential postage savings.

The key to comparing printers is the cost savings potential. There are other issues in addition to cost, but for most mailers, these are secondary. Smaller printers may have fewer pools, so they may not be as able to hit their precise in-home dates, for example. Printers may have several pools each week rather than a single pool, with different mixes of in-line and off-line pools. Some printers can accommodate variable trim sizes. But generally the analysis boils down to cost savings: Which printer can handle the co-mail for your job and deliver the lowest net cost? To help you determine this, ask printers for the following costs when making your evaluations:

• printing and paper;
• bindery;
• co-mail; and
• estimated postage.

Then tally these costs to figure out your total expenditure. Compare your estimates to what you're paying for printing now, and make the wise investment.

Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. Reach Jim at (505) 986-9902 or jcoogan@earthlink.net.