Strategy: Catalog Cost Cutting ’08, Part 2

Catalogers always need to know how to maximize their printing, paper and mail distribution programs, especially now that we all face seemingly continuous paper and postage cost increases. In our April issue (pg. 34), I exposed 10 places where expensive fat is hiding in your paper and its printing process. This month, we're going to do the same for your postal expenses.

More than 50 percent of the cost to print and mail a catalog is postage. Therefore, the manner in which you distribute your catalog into the U.S. Postal Service mailstream is critical to containing postal costs.

In this column, I’ll discuss pound vs. piece rate catalogs, as well as “slim jim” catalogs, which mail at the letter rate. I’ll also get into co-mailing, which presents a significant cost-saving opportunity for catalogers today.

1. Mail at the Piece Rate
A catalog weighing 3.3 ounces or less can qualify at the postal piece rate. If the catalog exceeds that weight, it must mail at the pound rate, which is higher. For example, a 72-page catalog measuring 8 inches x 10 1/2 inches with 64 pages on 30-lb paper and eight pages on 40-lb paper, and with no bind-in order form, could mail at the piece rate. Increasing the page count to 80 or using a heavier stock will cause the catalog to mail at the pound rate, increasing postage by approximately 10 percent. A 64-page catalog with 48 pages on 34-lb paper and 16 pages on 40-lb paper will also mail at the piece rate.

Whenever possible, move to a lighter stock to reduce weight and qualify for piece-rate mailings. Or adjust your trim size to accomplish the same.

2. Try a Slim Jim
Some catalogers continue to experiment with this letter-sized format to lower their postage costs. A slim-jim catalog needs to weigh 3 ounces or less and have at least a 50-lb text basis weight on the outside four pages to qualify at the letter rate. To qualify as a slim jim, the catalog also needs to measure 6 1/8 inches by 10 3/4 inches.

A 64-page slim jim with 48 pages on 38-lb paper and 16 pages on 50-lb stock will cost less to mail than a traditional catalog by approximately $50 per thousand — or a nickle per book. It includes 4,214 square inches of selling space and weighs 2.88 ounces. The cost to print, bind and mail is approximately 46 cents each based on a print run of 500,000 copies.

3. Test Every Tweak
Before you jump to the slim-jim size for the savings, know that the catalog must also be tabbed or wafer-sealed to qualify for the letter rate. Having to break that seal has been known to reduce response rates by up to 7 percent. There is a market for slim jims, particularly in B-to-B. But just be sure to test it against your current trim size before making the change.

Also, ask your printer to quote the print costs for a slim jim compared to a traditional-size catalog, both with equivalent square inches of selling space. While the slim jim will cost less to mail, standard format may be more efficient to print since fewer pages are required to get the same square inches of selling space. The printing difference can more than offset your postage savings.

4. Find a Co-Mailer
Co-mailing is the process of combining different catalogs into one mailstream so more of it qualifies for carrier route discounts.

There are two types of co-mailing; in-line and offline. In-line takes place on the bindery line. The catalog can be ink-jet imaged both inside on the order form and on the back cover. Offline co-mailing occurs after the catalog has been bound and only the back cover can be ink-jetted.

In-line co-mailing requires a minimum quantity of approximately 1 million books, with at least 200,000 copies from each participating catalog. Offline co-mailing benefits smaller mailings of around 500,000 books with 50,000 books or fewer per title.

Ten different catalog titles of 50,000 copies each might mail together for a combined co-mail pool of 500,000, for example. Ten to 20 different catalogs can mail together offline for savings of approximately 4 cents per catalog. Catalog printers have worked very hard to co-mail. They’ve invested in expensive equipment to offer this service so you can reduce your postage costs.

In the beginning, co-mailing was only for larger mailings. Now offline co-mailing is for all mailers, regardless of the quantity they mail. Push your printer for co-mail opportunities. If it can’t co-mail, find a printer that does. There are fewer variables, such as trim size, ink-jet location and others, with offline vs. in-line co-mailing programs.

Conclusion
A typical 64-page, 8 1/2 inches by 11 inches catalog costs approximately 60 cents per book, depending on quantity. Printing and paper account for 23 cents, while postage is in the neighborhood of 32 cents per book. The remaining 5 cents is for the ink-jet addressing, merge/purge expenses and bind-in order forms.

All told, postage accounts for more than 50 percent of the total cost to print and mail a catalog, up from about 40 percent just two years ago! Be sure you print with a company that specializes in printing and mailing catalogs, and by all means, participate in its co-mail opportunities.

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.