Next year, postage rates are expected to increase from 13 percent to 20 percent. This will be the first increase since mid-2002.
It’s important to spend the next 12 months preparing to absorb an increase of this magnitude. Don’t wait until the increase is in effect before deciding what to do. Now is the time to begin making adjustments. Following are 10 cost-savings tactics to try.
1. Look at your catalog trim size. If yours is a pound-rate catalog (i.e., weighs 3.3 ounces or more), a slight reduction in your book’s physical trim size will reduce your postage (and paper) costs. For example, a half-inch per page reduction on an 80-page catalog can save $15,000 on the paper and postage costs per 1 million copies printed. (Note: This assumes the U.S. Postal Service’s weight requirement doesn’t change.)
2. Test lighter-weight papers, as well as self covers vs. heavier separate covers. Using a slightly lighter basis-weight paper should have no impact on results. Paper is sold by the pound, so if you use fewer pounds, you may save money. And you also can save on postage, providing your catalog mails at the pound rate. A simple change from a 34 lb, #5 basis weight to a 32 lb, #5 basis weight will save about $12,000 in postage on a mailing of 1 million, 80-page catalogs (at today’s postage rates).
3. Switch to a lower-grade paper. Changing grades can have an effect similar to changing the basis weight (see No. 2 above). But be careful not to go too far. Test a #5 grade, for example, against a #4 or #3. A slight reduction in paper grade can reduce your direct selling expenses and ratio.
4. Tighten your circulation. Higher postage costs will increase your break-even point. Don’t over-circulate catalogs to your housefile and prospects against your adjusted break-even point. A 15 percent increase in Standard A postage costs will increase your incremental break-even point 6 percent to 10 percent, depending on your catalog costs and gross margin percentage.