MONTHLY PIECE COUNTS The chart above breaks out reported average monthly piece counts by three categories—ALL, Printing & Mailing Companies, and Dedicated Mailers. As an example, approximately 29% of all participants reported processing between 100,000 and 499,999 pieces per month. As you can also see, a majority of those firms classifying themselves as strictly mailing firms fell into this category.
PRICING VARIATIONS This graph, like many others in the study, illustrates two things. First, regardless of total annual sales, companies tend to report a broad range of pricing for a very standard, easily defined service. Second, companies with very large sales are just as likely to report extremes in pricing as their smaller counterparts. You will find the same erratic pricing when comparing highly productive companies against those with low productivity as measured by SPE.
With the release of our fourth Mailing Services Pricing Study one thing appears abundantly clear, and that is that more and more printers appear to be entering the mailing services arena and are prepared to meet traditional mailers head on.
When we distributed our first mailing services survey in June 2002, approximately 52% of those who responded indicated they offered both printing and mailing services, while the remainder said they were either dedicated mailing houses or in-plant operations.
Move ahead seven years to this year’s survey and we now find that almost 79% of all our participants indicated they offered both printing and mailing services, with less than 22% indicating they were primarily mailing operations or in-plant firms. At the very least, this increase in responses and participation by “printing & mailing services” companies seems to indicate that more and more printers view mailing services as a natural area for expansion as well as increased profits.
Participating firms are getting much larger as well. In mid-2002 when we conducted our first study, the average firm reported 2001 sales of $838,312 and an average monthly piece count of 771,235. In the current study, our average participating firm reported 2008 annual sales approaching almost $1.8 million and average monthly piece counts of almost 950,000. These sales figures exclude all postage income.
Profile of Survey Participants
More than 365 companies participated in this year’s pricing survey, from which approximately 320 surveys were used to compile our data. The data submitted was subjected to strenuous tests to check for basic submission errors and misplaced decimals. As a result, the overall margin of error for the pricing and ratios reported in the study ranges between 5-7%, depending on the specific price, ratio, or extraction. That is considered excellent for a survey of this size.
Below is a profile of our respondents:
PROFILE OF PARTICIPANTS
|2008 Annual Sales*||$1,712,550||$916,150|
|Sales from Printing||$1,078,906||$751,243|
|Amount of Sales from Mailing*||$633,644||$164,907|
|Number of Employees||14.5||7.6|
|Sales per Employee||$117,973||$120,941|
|Total Square Feet||20,076||6,500|
|Sales per Square Foot||$169||$152|
|Mailing Pieces Processed/Month||945,487||100,000|
In terms of raw sales and average monthly piece counts, this year’s survey set records in the range and diversity of its participants. So that certain ratios would not be distorted any more than necessary, the majority of our initial extractions excluded data submitted by companies with sales of less than $100,000 or greater than $10 million. Nonetheless, even with these exclusions, printers and mailing firms of all sizes and shapes participated in this survey.
While 44% of all our survey participants indicated they processed between 10,000 and 99,000 pieces per month, and thus would be considered “small mailers” under most definitions, another 27% of our participants said they mailed 500,000 or more pieces each month.
In fact, 7.1% of our participants told us they processed two million pieces or more each month. And that would make them huge in light of our data. We also heard from many shops in the middle that processed between 100,000 and 500,000 pieces each month. (See graph on page 28 labeled “Average Monthly Piece Counts by Participant Categories”.)
Pricing Versus Profits
The 2009-2010 Mailing Services Pricing Study covers more than 40 distinct services provided in the mailing industry, including NCOA list processing fees, de-duping charges, data entry rates, mail matching fees, machine and hand labeling charges, and inkjet addressing, just to name a few. Readers can download a free page from the study (NCOA charges) as well as view the entire table of contents by visiting the Q.P. Consulting website at: www.quickconsultant.com.
Despite the fact that Q.P. Consulting has conducted more than 20 pricing studies in two different industries, I never cease to be amazed by the extremes in pricing that they uncover—even for standard services where there is little ambiguity as to what is being priced. Even after eliminating obvious outliers and errors due to misplaced decimals or misread quantities, I still find huge variances in pricing. Even more surprising is the lack of any direct correlation between pricing practices and profitability.
As an example, the average price to inkjet address 5,000 letter size mail pieces, including sorting and traying, was $247. The median price was $225 (see graph titled “Pricing Inkjet Addressing for 5M Letters”). While these prices are in line with what has been reported in the past, you can see from the information in the graph that prices ranged from 40% below the reported average to 30% and more above the average.
As much as I would sometimes love to write a column with a headline such as, “New Study Reveals Best Pricing Practices,” I don’t envision that happening. These studies have, in fact, concluded over the years that the most profitable companies, as compared to the least profitable, are most likely to achieve that distinction as the result of better overall management practices, better marketing, and higher productivity and not as a result of charging significantly higher or lower prices than their peers.
New Additions to Study
This year’s Mailing Services Pricing Study is a departure from previous studies in that it relies on interpolation to expand to seven the number of quantity levels covered. Both average and median prices are reported for quantities ranging from 1,000 to 50,000. The study also provides price per thousand and price per piece, making it easier than ever to compare pricing practices in the industry. The 90-page study also includes an expanded series of market baskets that allows both printers and mailers to compare their operations and basic pricing practices using various sorting criteria such as population density, annual sales, sales per employee, and geographic location.
The study does dispute one of the most common myths in both the printing and mailing industries and that is that pricing practices vary greatly depending upon variables such as geographic location, population density, or size of firm. That simply isn’t true according to the data in this and in previous reports. Yes, you can find great variations in pricing for standard services and products, but the greatest variations will be found within specific market areas and not between one market and the next.
Senior contributing columnist John Stewart owns Paragon Printing & Graphics and is president of Q.P. Consulting, Inc. The “Mailing Services Pricing Study” is priced at $179. To order a copy, see the ad appearing in this issue or visit www.quickconsultant.com. Contact Joh at 2110 S. Dairy Road, West Melbourne, FL 32904, call 321/727-2444, email firstname.lastname@example.org, or visit his website at www.quickconsultant.com.