New Catalog Piece Weight Limit – Analysis by Lett Direct

We believe that the United States Postal Service (USPS) did something pretty awesome this year. They increased the piece rate weight limit from 3.3 to 4.0 ounces, effect January 22nd. This allows you to mail more pages with no impact on your mailing costs!

Lett Directs president, Stephen Lett, an expert on direct mail catalogs, last month published some thoughts of his own on this subject, along with an analysis that’s pretty convincing …

I have always advocated that catalogers should maximize the postal piece rate. And I feel even stronger about that now that the United States Postal Service this year is increasing the piece rate weight limit from 3.3 to 4.0 ounces, effective January 22nd. Although it may not seem so on the surface, this is a huge benefit for catalogers. In 2016, the cut-off depending on paper weight and trim size was approximately 60 pages to come in weighing 3.3 ounces or less.  This year, an 80-page catalog will still qualify at the postal piece rate if it weighs 4.0 ounces or less. That means a cataloger can circulate approximately 20 more pages without incurring any additional postage cost.

If you were at the maximum weight limitation in 2016, consider adding up to 20 pages to maximize the increased weight limitation. This assumes that you have the merchandise to support the added pages (it’s all about the merchandise). It also assumes that the product density be maintained. The incremental cost for print manufacturing and paper is low as you can see from the chart below. This is based on 400,000 catalogs with a 34 lb., body and 40 lb. cover.

2017 Costs 60 Pages 64 Pages 68 Pages 72 Pages 76 Pages 80 Pages
Total Cost (Approx.) $208,000 $211,000 $213,000 $219,800 $223,000 $226,500
Cost Per Page $3,467 $3,297 $3,132 $3,053 $2,934 $2,831
Square Inches 5,040 5,376 5,712 6,048 6,384 6,720
Percent increase in Space 15.38% 23.08% 30.77% 38.46% 46.15% 53.85%
Percent increase in Costs 2.97% 4.46% 5.45% 8.81% 10.40% 12.13%

 

2016 Costs 60 Pages 64 Pages 68 Pages 72 Pages 76 Pages 80 Pages
Total Cost (Approx.) $209,200 $212,200 $214,800 $226,700 $229,900 $235,600
Cost Per Page $3,487 $3,316 $3,159 $3,149 $3,025 $2,945
Square Inches 5,040 5,376 5,712 6,048 6,384 6,720
Percent increase in Space 15.38% 23.08% 30.77% 38.46% 46.15% 53.85%
Percent increase in Costs 2.95% 4.43% 5.71% 11.56% 13.14% 15.94%

 

The chart above shows the incremental cost of increasing page count in 4-page increments from 60 pages up to 80 pages based on a print run of 400M catalogs. Postage cost is a constant in these increments. The additional cost is for paper and print manufacturing. Note the percent increase in space and the corresponding increase in cost. For example, last year it would have cost approximately $235,600 to mail an 80-page catalog. The in-the-mail cost this year for that same catalog is $9,100 less – or $226,500. This difference is all reduced postage cost, i.e., more pages and square inches of selling space and less cost = a win-win!

The economics of adding pages is extremely favorable. Keep in mind that postage is 50% to 60% of the total cost to print and mail a catalog. Therefore, being able to circulate more pages without increasing half or more of your costs is a big advantage. Adding pages without increasing your postage costs will leverage your direct selling expenses. The incremental cost of adding more pages is minimal considering the increased revenue and ROI.

What can you expect? Revenue should increase by one-half the percent increase in page count. Therefore, increasing from 60 to 80 pages will yield 33% more selling space. Gross revenue should increase by approximately half this amount or by 16%.

Increasing page count is a good investment and an excellent way to grow your business. If your catalog includes 60 pages (or less) currently, I am not necessarily recommending you increase to 80 pages all at once. Rather, increase in 8-page increments with a goal to get to 80 pages over time. Always best to take a more conservative approach.

The USPS has done the right thing by increasing the piece weight rate limitation. The American Catalog Mailers Association (ACMA) has been the driving force behind this change. I believe it is one of the most progressive and significant changes coming from the USPS in years. The ACMA needs your support to bring about other changes such as a prospecting postage rate, a ceiling on postal rate increases, etc. Join today and get behind their good efforts to help catalog companies.

About the Author: Jim Gibbs

Vice President of Sales & Marketing at The Dingley Press. Jim has been with Dingley since 2002 and lives in Maine near our Lisbon, Maine plant location.