Understanding Co-Mail Costs is Key to Comparing Printing Bids

Even though paper costs are ratcheting up, printing costs are still at an all-time low. It's pretty straightforward to compare competitive printing bids, but it gets tricky comparing co-mail costs and postage. Why is it so complicated? It seems printers want to keep it that way. Margins in printing are razor thin, and the profits for printers are in their co-mail programs.

How can you get to your true comparable costs for the three elements — printing and paper, co-mail, and postage — of printing and mailing your catalog? First ask the printers bidding on your catalog to give you three numbers:

1. cost of printing and paper;
2. cost of their co-mail program (defined as everything that isn't on the printing and paper quote, including list processing, freight surcharges, co-mail costs and any administrative costs); and
3. cost of postage.

Be aware that you’ll see all kinds of analysis from catalog printers with detailed spreadsheets. But all these spreadsheets seem designed to confuse rather than clarify the rather simple issue of “How much is the check I write to the printer, and how much is the check I write to the post office?”

Ask for a pro forma invoice. Make the printer detail all costs up-front so you don’t get nickeled and dimed with charges that are buried in the fine print. These costs include list processing, the percentage of co-mail postage savings that's kept by the printer, administrative costs, and freight and fuel surcharges.

Getting a pro forma invoice forces the printer to detail all costs and protects you from hidden charges. Most importantly, it allows you to compare the total cost vs. other printers. If you can’t find this information, press your salespeople to get it for you.

To accurately compare postage costs, provide the printers with actual mail files from previous jobs. Otherwise the printers are forced to use national averages, which may vary widely from the actual demographic composition of your mail file.

Bigger printers produce a larger volume of catalogs, but that larger volume may not necessarily translate into bigger savings. Mail pools reach saturation between 3 million and 4 million catalogs, so a major catalog printer may print 9 million catalogs in a week, but it will split that up into three different mail pools. The bigger printers have an advantage because they consistently have larger pools throughout the year.

However, two big changes have taken away the volume advantage of the biggest printers. Mid-size printers are now using ALG, a consolidator for co-mail. This has made printers like Brown and Catalogs America comparable in costs and savings to the biggest printers. The second seismic shift with co-mail is that Quad/Graphics bought Worldcolor (formerly Quebecor), greatly increasing its combined mail volume. Quad/Graphics’ customers can expect to see bigger savings.

Look at the size of the mail pool your printer puts you in to get a good perspective on whether you're achieving maximum savings. If the pools are 3 million to 4 million in size, then you know your pool is large enough to capture most of the potential savings. The smaller the pool, the smaller the savings. If your pool sizes are small, you may need to look for a printer with a bigger pool or work with your printer to get you in pools with bigger savings.

Are co-mail savings negotiable? The bigger your volume, the better chance you can negotiate. For mid-sized and smaller catalogers, however, the standard deal is that postal savings are typically split 50/50.

How can you tell if a competitive printer is quoting you real, achievable savings? Accounting for the actual costs after the fact is necessary because printers won’t guarantee you postal savings. Before you decide to switch printers, send your prospective new printer mail tapes of live jobs and ask it what its co-mail cost and postage would have been.

When you get a postal analysis from the printer, ask if that pool size will be available if it's awarded your business. Make sure it has the quantity of the circulation, the weight of the catalog and actual postage. The co-mail savings can't be accurately represented without this information.

With knowledge of a printer's three basic costs and a pro forma invoice in hand, you should have a good understanding of your total printing, co-mail and postage costs, enabling you to pick your best possible printer.

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.