Across the street from Wolf Mailing and Marketing Services, I noticed one of our neighbors preparing his race car for the local speedway track. Admiring his sleek speedster, and always interested in going fast, I asked, "How much does a car like that cost?" His smile nearly grew to the width of this face before replying, "How fast do you want to go?"
I realized then that, for the most part, price is proportional to speed the more you pay, the faster you can go. His wisdom meant more to me than just a race car. The racer's comment lingers when I see my inkjet printer addressing mail and sorting at speeds in excess of 50,000 pieces per hour (pph).
Of course, the cost of mailing equipment is a serious consideration. But when considering inkjet addressing equipment, speed is more important than the price tag. Consider the economics of the matter: With greater throughput per hour, one can turn jobs around faster. That will allow more help to be hired, which increases capacity. With greater throughput on an inkjet printer, one can meet a deadline, frustrate a competitor, gain more market share, build the brand, reduce expenses and improve profit margin. The economics of inkjet addressing show that when making the commitment to addressing mail, performance and flexibility can outweigh price.
Inkjet Fundamentals
For the purposes of this article, inkjet equipment consists, in progressive order, of:
- The feeder
- The base that handles the mailpiece
- A printhead, or printheads
- A dryer (which is optional)
- A conveyor
When considering any piece of equipment that handles paper, it's important to consider the wide array of possible mailpieces. Inkjet addressing equipment is primarily designed to print the address on a mailpiece; yet most inkjet printheads provide the ability to print other text or graphics as well. A mailpiece, then, could be an envelope or a self-mailer, such as a newsletter, postcard or folded brochure.
Costs and Profit
There are five core costs when it comes to addressing a piece of mail:
1. The inkjet addressing equipment
2. Labor
3. Electricity
4. Ink
5. Maintenance
This article addresses the economics driving inkjet addressing and shows how overall performance can justify the purchase of the machine that offers the best throughput. Time and space doesn't allow for every deviation, nor an exhaustive explanation; however, when entering one's own figures, the principles will remain accurate and demonstrate that making a profit with an inkjet printer should not be overshadowed by the lowest price alternative. A calculation will look something like this:
Selling price per piece x average pieces per hour = Total revenue per hour - Total costs per hour = hourly profit x productive hours per week x 52 weeks per year
Ink Choice Affects Throughput, Flexibility
The cost of consumables the ink itself is often overestimated when comparing inkjet printer options. One inkjet printer manufacturer says its cost for ink is 45. per thousand pieces, while another says its ink is half that price, or 25. per thousand. If charging $25 per 1,000 mailpieces to address and sort, the difference between the two ink costs is less than one percent of the selling price.
While controlling costs is crucial in a highly commoditized service market such as inkjet addressing, improving the overall profit margin is the better calculation to utilize. While cost is a portion of the calculation, the most important factor determining ink choices is dry time and types of substrate (i.e., paper) that will be addressed. The faster the drying time, the faster the run times. Coated stocks can be challenging for water-based ink if one desires optimum speeds. This includes papers with a gloss finish, such as aqueous or UV-coated.
When evaluating inkjet printers in today's competitive environment, flexibility is of utmost importance. Depending on what range of paper a mailer sees in his operation, ideally, an inkjet solution will be flexible enough to address on all paper finishes without sacrificing speed.
How Fast Do You Want to Print?
I mentioned to some fellow mailers at a recent Mailing and Fulfillment Services Association conference that my production crew can easily achieve output speeds of 34,000 pph using three people and sorting a 5.5" x 8.5" postcard for U.S. Postal Service Standard Mail. We've occasionally seen speeds greater than 50,000 pph.
Knowing I would be met with some skepticism, I filmed our crew and loaded the video on my Apple iPhone. I did this to show those investigating inkjet choices, but also because it's simply fun to watch a blur of postcards speeding by that are individually addressed and sorted at the rate of 567 per minute (or nine every second). At a price of $20 per thousand, the gross revenue is more than $675 per hour.
One of the attendees cornered me and boasted that their arrangement was better at 28,000 pieces per hour with only two people. But a common mistake is to calculate output per person only. When looking at labor, one will obtain a better return on investment when the faster machine exceeds the slower machine by the cost of the additional labor for each hour.
For example, assume the same for two new inkjet printers from competing suppliers one slightly faster than the other. Labor cost is $15 per hour per person (though using actual numbers will show the same benefit). If charging $20 per 1,000, once the slower machine is exceeded by 1,000 pph, revenue has increased by $20 (or 1,000 pieces more per hour at $20 per 1,000). Additional labor cost only went up $15; therefore, the gain is $5 per hour. If speed has increased by 6,000 (34,000 pph vs. 28,000 pph) using three people, then revenue has increased $120 and labor has one increased $15. Therefore, $105 each hour has been gained. If the inkjet printer is productive 80% of the week, or 32 hours, then the printer that provides the faster line speed will have generated $3,360 more in one week. Since there are 4.3 weeks per month, an additional $14,428 per month has been generated, which can easily justify the higher price for the faster and more flexible choice.
Furthermore, if choosing the printer that yields 34,000 pph, then the slower machine has been outperformed by 38,400 at the end of an eight-hour shift, assuming both machines perform at 80%. The greater throughput generates significantly more profit at the end of one month, as demonstrated in Table 1.
Making the Choice
The key to inkjet printer choices are throughput and flexibility. Flexibility can be determined by the ink and the printer's ability to handle a variety of sizes, thicknesses and substrates. Additional revenue from better productivity should exceed all costs to obtain faster line speeds, which will generate more profit. That additional profit can easily exceed the difference in the costs not thoroughly covered in this article, such as maintenance or cost of equipment. Added throughput will also allow one to turn jobs around faster and achieve more productivity per shift. This in turn provides greater capacity and more than likely a competitive advantage.
More information can be found by studying the benefits of incremental pricing. The figures are based on assumptions, but if the assumptions are reasonable, then the desired outcome and governing economics can be reasonably achieved.
John Wolf has 25 years in the mailing industry and is President/CEO of Wolf Mailing and Marketing Services, Oklahoma City, Oklahoma. Wolf Mailing's total revenue has grown more than a cumulative 50% in the past four years. He can be reached at ilovemyjob@wolfmailing.com.
Table 1
Printer A Printer B
28000 pph with 2 people 34000 pph with 3 people
and ink @ 25. per 1,000 and ink @ 45. per 1,000
(a) 8-hour day
224,000 272,000
(b) Ink cost for the day
$ 56 $ 123
(c) 8 hrs x no. of people x $15 hr
$ 240 $ 360
(d) Labor + ink (b+c)
$ 296 $ 483
(e) Gross Revenue (a x $20/1,000)
$ 4,480 $ 5,440
(f) 80% productive per day (e x 0.80)
$ 3,584 $ 4,352
(g) x 5 days per week (f x 5)
$17,920 $21,760
x 4.3 weeks per month (g x 4.3)
$77,056 $93,568
