Co-Mailing: The Biggest Controllable Variable in Your Catalog’s Printing and Postage Costs, Part 1 of 2

Catalog printers are running full-page ads touting their co-mail capabilities. Why has co-mailing become such a hot topic in the dialog between catalogers and their printers? Simply put, co-mailing represents the potential for very significant savings in postage costs. The variation in savings between printers, based on the size of co-mail pools, in-line co-mail and off-line co-mail, means choosing the right co-mail partner can be the most significant factor in selecting your printer!

The majority of a catalog’s publishing costs are contained in the three P’s: printing, paper and postage. The cost of creative, list rentals and merge/purge is small compared to these three cost categories. And catalogers have little control over these costs. Postage isn’t negotiable, paper costs are increasingly mandated by the paper companies and printing margins are razor thin. This means printers can’t cut their manufacturing costs, leading to very similar prices because competition between printers dictates virtual price parity.

But, printers can offer significant cost savings to catalogers via co-mailing. Co-mailing involves binding your catalog along with a pool of other catalogs so your carrier route or tier qualification discounts are combined. The post office offers significant discounts for breaking the mail into tiers, rewarding mailers who prepare their mail so it’s efficient for the post office to handle.

The most efficient mail gets discounted at the highest tier, and the less efficient mail is classified in lower tiers with higher postage. The postal tiers range from carrier route (with a postage rate of $.249) down to Mixed ADC PRST (with a postage rate of $.515). The May 2007 postal increase not only sharply increased catalog postage, but also the spread in postage costs between efficient mail, like carrier route bundles, and the least efficient mail, such as the residual bundles. With a 25 cent difference in postage for mailing the same catalog based on whether it qualifies for carrier route or the least efficient tier, printers have developed programs to combine mail and capture enough savings to make it profitable for printers to co-mail catalogs.

There are two kinds of co-mail pools: in-line pools and off-line pools. In-line pools are when a printer combines two, three or four catalogs and binds the catalogs in-line. Off-line pools are where the printer binds the catalogs first, and then ink-jets the addresses in a second stage. The off-line technology allows for larger pool sizes (i.e., a greater number of participants). In-line pools are limited by the number of catalogs that can flow through the pockets on a bindery line.

The rule of thumb is that catalog mailers with a circulation under 300,000 capture greater savings with off-line pools. Catalog mailers with circulations greater than 300,000 have the potential for larger savings with in-line pools. And the larger the circulation, the greater the potential savings with in-line pools.

Check back next week for the final part of our two-part series on co-mailing economics, where we’ll fill you in on the estimates you need to get from printers to accurately compare savings between co-mail pools, as well as provide you a list of questions to ask printers when negotiating a co-mail deal.

Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. You can reach him at (505) 986-9902 or jcoogan@earthlink.net.