Printing & Paper Efficiences
In this day of rising costs and lower-than-expected response rates, it’s important to know how best to maximize your catalog print manufacturing, paper and postage efficiencies.
These costs represent, on average, 80 percent of total catalog selling expenses and 20 percent to 25 percent of net sales.
This month, I’ll examine various printing and paper cost options that can reduce your expenses while maximizing page count. In other words, I’ll look at ways to stretch your catalog-expense dollars.
Maximize Page Count
Pages increase the amount of revenue generated per catalog mailed. Rule of thumb: The revenue per catalog mailed will increase at one half of the percentage increase in page count. For example, if the page count increases by 20 percent, the revenue per catalog will increase by 10 percent.
Assuming there’s plenty of good merchandise to sell, adding pages makes economic sense. Adding pages while making certain the paper and press manufacturing are efficient can lower your incremental break-even point while increasing revenue—a real win for you.
My 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. The focus is on print manufacturing, paper and postage. Your goal should be to add pages to the catalog as economically as possible.
To accomplish this, remember that the weight minimum for the standard “A” postal rate is 3.3 ounces. A catalog weighing less than 3.3 ounces can be mailed at the minimum postage rate. But a catalog weighting more must be mailed at the pound rate. More pages equals more weight, increasing the unit cost of postage.
You want to maximize page count without increasing your postage costs when you can. Once you’re required (by weight) to mail at the pound rate, using the right paper and page-count combination can help minimize the increase.
The Right Combination
Understand 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.
The figures in Charts #1 and #2 are based on 1 million catalogs (8˝ x 10 1/8˝) with the use of a bind-in order form envelope. I’ve given page options from 48 to 80 that offer clear alternatives.
Let’s look at what these charts illustrate. In chart #1, the page count is being increased from 48 pages to 80 pages but always on 50 lb, #4 grade paper. The weight of the catalog in all of the page-count options is more than 3.3 ounces, which means they’ll have to be mailed at the pound rate, resulting in additional postage costs.
In chart #2, you’ll see you can mail a 48-, 56- or 64-page catalog at the minimum postage rate, since all of these combinations weigh less than 3.3 ounces. Note: I switched to 38 lb, #5 grade paper for the 48- and 56-page books.
If you’re willing to alter your paper requirements using a combination of 38 lb paper for eight pages and 34 lb paper for 56 pages, you 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 your 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 eight pages) and 34 lb (for 56 pages) paper.
By changing the basis weight of the catalog, the cost per catalog page is reduced by $1.67, which represents a 19.6-percent cost reduction. On a run of 1 million catalogs, you can save, in real dollars, a total amount of $107,000 by making the change to a lighter-weight paper combination. (That is: 64 pages x $544/M x 1 million copies = $544,000, and 64 pages x $437/M x 1 million copies = $437,000. $544,000 - $437,000 = $107,000, or 19.6 percent savings.)
Assuming a 6-percent customer return rate and a 55-percent gross profit margin ratio, your incremental per page break-even 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’s generally most efficient to print in 16-page (or at least eight- page) sections and with one weight of paper if possible. For example, you could print a 64-page catalog with two press makereadies (two 32-page sections) more efficiently than you could print a 44-page catalog (requiring three makereadies).
As you can see from the charts, it’s 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 U.S. Postal Service piece rate. If you’re unsure 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, consider reducing the basis weight of the paper you’re using to reduce and leverage costs.
Stephen R. Lett is president of Lett Direct., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 541-0608 or by e-mail at www.lettdirect.com.