The Right Paper Can Save You Money

At the beginning of this year, the U.S. Postal Service increased “Standard A” bulk mailing rates up to 11 percent. Few catalog marketing companies were in a position to simply absorb the extra postage. The challenge facing them was how to mitigate such a significant cost increase. Fortunately, there are ways to optimize production costs and offset much of the cost of the postal rate hike.

The Three “P’s”

The three major cost components in producing a mail order catalog are postage, paper and printing.

“Postage is basically a fixed cost, but paper and printing can yield significant cost efficiencies,” notes Andrew Hanscom of The Strategic Paper Group in Newport Beach, CA, a paper merchant. “There are several key variables: optimizing the trim size of the catalog, adjusting the page count and going with a lighter paper.”

The goal for most catalog publishers is to hit the “magic” weight, the piece rate threshold of 3.3087 ounces. As the number of decimal places suggests, this is a precise calculation involving everything that contributes weight to a catalog.

“I work with catalog producers to optimize their catalog size by height and width on press—the trim size,” Hanscom explains. “Then we calculate the total square inches of printable space in their book. At that point, we know the weight of the catalog and we can start making decisions that really affect cost.”

The Paper Factor

Of the three “p’s,” paper holds the most significant potential for producing cost savings. Yet, it isn’t just a matter of reducing the basis weight. Paper should be evaluated in terms of price and performance on press, as well.

Clearly, paper waste is a significant cost factor, especially on a web press delivering 3,000 impressions per minute. Reducing paper waste involves:

1) knowing the true and actual consumption of paper on press and in the bindery, and

2) purchasing paper by its on-press performance. Paper that runs well will quickly reduce waste and cost.

Knowing your actual paper consumption on press and in the bindery is challenging. “This may be difficult for catalogers who leave the paper purchase to the printer, but those who take on the added responsibility of buying their own paper will have the figures on which to base cost saving decisions,” explains Hanscom.

To put 500,000 catalogs in the mail might well require 600,000 pounds of paper. Every pound of paper adds up. This is where the paper merchant’s relationship with the paper mill comes in. A paper merchant is in a position to know whose lightweight coated #5 runs consistently on whose presses, and whose doesn’t.

“The difference between a consistently good sheet on press and in the bindery, in terms of waste, can easily exceed 2 percent of the total production cost,” notes Hanscom. “I’ve seen printing presses under-consume by 3 to 4 percent and that could well represent hundreds of thousands of dollars in savings.”

Basis Weight: How Low Will You Go?

Reducing the basis weight of the catalog paper is considerably more complicated than simply ordering a new paper grade. It involves worries about opacity, brightness, strength and overall printability.

Paper manufacturers have the same concerns and are creating papers as light as 26-pound weight that can help optimize catalog size and mailing costs while maintaining all of the aesthetic qualities catalogers demand.

Many catalog producers are wary of going as low as 26-pound weight. However, even a modest reduction in basis weight can yield significant savings. A cataloger may decide to reduce the trim by 1⁄8˝ and take the basis weight down from 32-pound to 30-pound. This is a relatively conservative change, but the annual savings could easily run into the hundreds of thousands of dollars depending on the number of catalogs mailed. (see sidebar to right)

Your paper manufacturer or sales rep will help you determine whether there is a risk of losing aesthetic qualities by reducing basis weight. Get a second opinion. Printers will be able to help you assess the reputation of various papers for various purposes.

“The Musician’s Friend”

The Musician’s Friend, a Medford, OR-based mail order retailer of music equipment and instruments, has worked steadily with its paper seller over the past five years to progressively reduce the basis weight of the catalog paper and effectively mitigate the impact of several postage rate increases.

Says Craig Johnson, senior vice president of merchandising at Musician’s Friend, “We started at 34-pound and gradually reduced basis weight to 32-pound, then 28-pound. And a special 27-pound sheet developed just for us that led us to move to the 26-pound paper we use today.”

Over the past five years, Musician’s Friend has found cost savings in all areas of catalog production.

“In our circulation planning process we define the weight of each book and then optimize the size and press fit of the catalog. Today, we produce a 164-page catalog that mails each month,” he explains. “Basis weight reduction has been an important part of our pursuit of cost efficiencies. For example, by going from the 28-pound sheet to the 27-pound paper, we saved substantially in postage alone. The move to a 26-pound sheet, along with other strategies, has minimized the impact of the most recent postal rate increases. We have seen no degradation in print quality as we’ve moved to lighter papers.”

The 27-pound interim basis weight paper developed for Musician’s Friend by its paper provider was a custom product—designed to preserve brightness, opacity and printability. It was this “development” grade that convinced Musician’s Friend that going to a 26-pound sheet was a good move.

“Our practice has been to work closely with the mill through our paper merchant,” points out Johnson. “While it might be easier and less complex to work only with the printer and leave the paper purchase to them, we have found that the merchant/mill approach helps us better define our costs and provides control over one of our largest expenses, the paper.”

The Bottom Line

When catalogers are looking to cut costs, paper may be the largest single cost factor of the three p’s under their control.

Cost efficiencies involving paper are to be found on press, in the bindery and in the weight of the paper itself. However, these efficiencies are not always easy to identify, nor are they simply a purchasing decision. Optimizing production costs requires a close working relationship between paper suppliers, printers and mailing houses. Of the cost efficiencies available to the cataloger, perhaps none has more bottom line potential than paper.

A Little Bit Here, A Little Bit There

This example shows how carefully planning your paper purchases can help you trim dollars from printing and mailing costs.

1) Calculating total useable square inches for a catalog measuring 81⁄8˝ x 107⁄8˝, consisting of 72 pages plus four pages of cover, gives you 6,715 square inches of printable space. If the inside pages are 30-pound lightweight coated no. 5 and the cover is a 60-pound sheet, each catalog weighs 3.5716 ounces. That’s a bit too heavy to meet the U.S. Postal Service piece rate threshold of 3.3087 ounces.

2) If the publisher reduces the trim height to 101⁄2˝ and lowers the text basis weight to 28-pound, the new piece weight will be 3.2415 ounces—within the “magic” weight. That reduces the cost of paper and postage from $80.24/sq. inch to $78.16/sq. inch.

Now this might not seem like a lot, but if this cataloger mails 1.5 million catalogs monthly, the combined postage and paper savings could amount to $384,000 per year. Take into account the improved press performance of three percent, which certain papers can deliver, and this customer is approaching an annual savings of $500,000.

Tim Cronin is a catalog paper specialist at Fraser Papers Inc. of Stamford, CT. He can be reached at (203) 426-6463 or via e-mail at tcronin@fraserpapers.com.