Cost-cutting Tips You Can Take to the Bank

Bind-in prices range from $12 to $20 (or more) per thousand depending on the size, quantity printed and use of color. They add weight to the catalog, too, which can increase postage costs. If you decide to print the order form on a page in the catalog, part of your cost saving calculation needs to include the gross margin you will forfeit from the elimination of saleable merchandise on the page (or two) you devote to the “printed” order form. Eliminating the bind-in order form also will impact your ability to trace orders to a specific mail code, increasing the necessity to do a matchback.

THREE

Improve Your Margins

Work with suppliers to improve margins by lowering costs or increasing retail prices. Catalogers are reluctant to increase prices. Many use a bad formula when pricing merchandise. For example, if the cost of an item is $20 and your desired mark-up is two times, you might establish a retail price of $40, which yields a gross margin ratio of 50 percent. The preferred method of pricing is based on the perceived value of the item.

If you’re selling name-brand merchandise others are selling, this method of pricing is more difficult. But if you’re selling proprietary items that aren’t readily available, pricing based on perceived value will avoid leaving gross margin dollars on the table. Consider increasing prices. It might be painful, but catalog customers normally don’t purchase based on price.

FOUR

Catalog Trim Size

If you mail a pound-rate catalog (weighing 3.3 oz. or more), a slight reduction in the physical trim size of your catalog will reduce your postage and paper costs. For example, a reduction of a half-inch vertically on an 80-page catalog can save $15,000 on the paper and postage costs per 1 million copies printed.