Catalog Cost Cutting ’08, Part 1

Catalogers always need to know how to maximize their printing, paper and mail distribution programs, especially now that we all face more paper and postage cost increases. So this month and next, I’ll share some effective ways to squeeze more savings out of these programs. In this first part, I’ll expose 10 places where expensive fat is hiding in your paper and its printing process. Next month, it’s all postal.

Squeeze the Press
What you pay your printer to print your catalog pales in comparison to the amount you spend for paper and postage, but there are still significant savings to be had. The two things that matter most are page count and print quantity.

1. Print with a known catalog printer.
I often receive calls from small sheet-fed or web printers who want to submit a quote to catalogers I work with. My first question is, “Can you tell me about your co-mail and drop-ship mail distribution programs?” The phone goes blank; they haven’t a clue!

Lots of printers do a good job putting ink on paper. Today, however, mail distribution is of upmost importance and local sheet-fed and/or web printers simply can’t compete.

Smaller catalogers are often tempted to entertain such quotes, but these printers have no ability to penetrate the postal system. They typically truck the catalogs to a local lettershop facility, which ink-jets the back cover only (the catalog can’t be ink-jet imaged once it’s bound) and distributes the catalogs through its nearest bulk mail facility or post office.

If you print more than 100,000 copies, mail distribution is of utmost importance — as I’ll explain next month — and local printers simply won’t get your books “deep” into the postal system to take advantage of co-mailing or other postage discounts. So I highly urge you to work with established catalog printers.

2. Don’t print on-demand.
This technology has come a long way, but it’s not a real option for catalogers yet. Print-on-demand is used for very short runs of 500 copies or less. Good applications for this are journals and books, not catalogs.

3. Know your press equipment.
Eliminating small and on-demand printers, you’re best bet is to print with an established web-offset catalog printer. But there are differences between double web and single web printers. Specifically, there’s more flexibility with page count/basis weight combinations with a single web printer. Catalogers should know which is being used to take advantage of this flexibility, along with the various efficiencies of catalog size and basis weight.

4. Use the fewest press forms possible.
Page count and the printing press being used determine the number of press forms required. One press form is the most efficient to print. The more press forms, the greater the cost. Generally, 32-page or 48-page press forms are the most efficient to print. Next month, however, I’ll discuss why a 32-page book isn’t efficient from a postage standpoint.

A 48-page catalog can also be produced using a 32-page press form on one basis weight and a 16-page press form on different basis weight, but this requires two forms, which adds to the cost.

5. Use a uniform paper weight and grade.
Keep the paper weight and grade the same for all pages throughout the run. You might need to run the cover on a heavier stock for “feel,” but the inside body pages should run on a single, lesser weight of paper.

6. Restrict covers to four pages.
Try not to print an eight-page cover, even if your catalog qualifies for the piece rate. It’s just an excess expense.

Surgical Paper Cuts
After three paper price increases last year, catalogers are paying approximately 20 percent more for paper than they did a year ago. Paper represents more than 50 percent of your total printing costs, so the impact of these increases is difficult to absorb. Here’s how to deal with the pain.

7. Buy your own paper.
If you purchase more than 80,000 pounds of paper at a time — about two truckloads, or the equivalent of printing approximately 300,000 64-page catalogs with a trim size of 8˝ x 10.5˝ on 40-lb paper — consider buying your own paper from a well-known, respected merchant. Paper and freight are two profit centers for printers, and they’re both areas that catalog companies understand the least.

Reasonable savings expectations of purchasing your own paper range from 4 percent to 6 percent or more. Typically, a print run underconsumes paper in the range of 2 percent to 3 percent, which goes back to your inventory if you purchased the paper. But if the printer purchases the paper, that overage is put back into the printer’s own inventory to be sold again to another cataloger.

If you’re not buying a substantial tonnage of paper — 500,000 pounds or more at a time — you may not have the leverage that your printer does with the mill. Informing your printer that you’re considering buying paper from a merchant, however, often results in savings without you changing a thing. This can spark lower paper consumption requirements and a lower cost per hundred weight (cwt).

8. Get your printer to waive handling fees.
Make sure your printer won’t charge you a handling fee if you supply your own paper. Some printers do; others don’t. A handling fee of 50 cents cwt can add up to thousands of dollars annually. But these fees are open to negotiation, and most printers will waive this charge. I know of two catalog printers who don’t charge such handling fees.

9. Don’t accept price caps.
If a paper merchant offers you a price cap on paper, don’t accept it. The cap is generally set high so the merchant is price-protected. This makes it an expensive insurance policy for the cataloger. It’s neither practical nor necessary.

10. Always test your options.
There’s obviously been a trend toward lighter-weight papers to reduce paper and postage costs. Some B-to-B and lower-ticket consumer catalogers even use super calendered paper, which costs 15 percent to 20 percent less than coated paper.

You have options, but don’t switch from coated to super calendered without doing a split test to determine its effect on response and average order size.

Check back next month when we carve into the postage costs that consume more than 50 percent of your catalog budget.

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He’s the author of the Catalog Success-published book, “Strategic Catalog Marketing.” You can reach him at (302) 539-7257 or at www.lettdirect.com.