It's January and again time for more, significant postal changes. This year we must convert to the IMb with its increased software, printing, and technical specifications. Legacy addressing system upgrades (if available) start at $3,000 and may go as high as $15,000 for controllers, computers, and software. State of the art replacement systems run between $80,000 and $120,000.
We paid for our first state of the art production system (with similar costs) in the early 1990s with increasing mail volumes and bottom line profitability. New equipment costs must now be justified in the middle of a market meltdown (a 25% decrease in all mail volume from 2006 to 2013), desperate competition, and a lack of profitability. Most in our industry are pricing direct mail preparation as if it were a grocery store loss leader, hoping to make up their losses with non-existent volume.
Along with the switch to the IMb, folded self-mailers are going through significant design changes. The new rules require more and bigger tabs, different fold patterns, and new paper weight requirements. Complexity (and our liability) has been added by requirements that change depending on the weight of the finished mailpiece. For 2014, the Postal Service is demanding mail.dat and full service from our industry. The full service mandate adds even more costs and complexity to service providers. Some of the large early adopters in our industry have spent millions on the IMb/full service transition.
So are mail service providers (MSPs) going to charge customers to cover our added costs of production? Are we going to finally charge more for placing three tabs on a mailpiece in a configuration our equipment cannot handle? Are we going to tell a good customer that because they didn't check with us first, and use the proper paper weight, their postage will be double compared to their last mailing?
Or will we lie on the postal documentation as to a mailpiece's acceptability for the rate claimed; risk paying the increased postage costs ourselves (if postal inspectors visit us six months after a mailing); sign our name on postal documentation under threat of perjury; and ultimately do what our competitors would do, which is slip the mailing through acceptance? Surprisingly our industry accepts all of these risks, including jail time, and then charges less per piece than we did in 2006. It was in 2006 that Postal Service engineers were given carte blanche with mailpiece designs and sent mail volume into a death spiral!
Added to the design changes since 2006, we have had to implement numerous intelligent mail barcodes, changes in package/bundle preparation, new (more expensive) tab and strapping material requirements, new rate levels, more complex software, numerous forms of electronic documentation, SOX, and the closing of local facilities. With every change, the complexity of producing mail and our costs have increased. Some of these costs are major, some minor, but in nearly every instance our industry has not passed them on to customers. With every postal change we matched higher production and equipment costs against ever decreasing demand and felt compelled to give away more and more services in a futile attempt to retain customers.
If only the USPS worked as hard at saving mail volume as the rest of the industry!
It is time for the USPS and our customers to GROW UP and face the consequences of their actions. The USPS has to realize that its drive for processing efficiencies is responsible for the significant loss in mail volume. Flats alone have decreased (from 2006 to 2010) by 30%. And yet no one in the Postal Service did a cost benefit analysis on the effects of implementing the new folded self-mailer rules. No one asked if hoped-for processing efficiencies will make up for a significant loss in mail volume. The simple fact is that no one in the Postal Service cares about our costs or mail volume.
Customers need to realize that if they want to print on cheap paper that doesn't meet the new postal specifications, their postage is going to double (auto rates to non-machinable). Customers must also realize that working with the cheapest know-nothing print service provider has very specific, higher costs associated with that option. Meeting stringent postal dimensional and graphic design standards requires a professional to provide the overall lowest cost.
The Postal Service has made significant changes to mailing standards since 2006. MSPs have been losing money by absorbing the additional costs associated with these standards. It is time to charge a reasonable rate for our knowledge, services, and expertise! I have no doubt mail volumes will decline if we charge our customers what it costs to produce their mail, but we can no longer afford to subsidize their marketing efforts. The simple fact is that we (and they) may have to move on to something more profitable.
Todd Butler, Butler Mailing Services, can be reached at 513.870.5060, toddb@butlermail.com or www.butlermail.com.
We paid for our first state of the art production system (with similar costs) in the early 1990s with increasing mail volumes and bottom line profitability. New equipment costs must now be justified in the middle of a market meltdown (a 25% decrease in all mail volume from 2006 to 2013), desperate competition, and a lack of profitability. Most in our industry are pricing direct mail preparation as if it were a grocery store loss leader, hoping to make up their losses with non-existent volume.
Along with the switch to the IMb, folded self-mailers are going through significant design changes. The new rules require more and bigger tabs, different fold patterns, and new paper weight requirements. Complexity (and our liability) has been added by requirements that change depending on the weight of the finished mailpiece. For 2014, the Postal Service is demanding mail.dat and full service from our industry. The full service mandate adds even more costs and complexity to service providers. Some of the large early adopters in our industry have spent millions on the IMb/full service transition.
So are mail service providers (MSPs) going to charge customers to cover our added costs of production? Are we going to finally charge more for placing three tabs on a mailpiece in a configuration our equipment cannot handle? Are we going to tell a good customer that because they didn't check with us first, and use the proper paper weight, their postage will be double compared to their last mailing?
Or will we lie on the postal documentation as to a mailpiece's acceptability for the rate claimed; risk paying the increased postage costs ourselves (if postal inspectors visit us six months after a mailing); sign our name on postal documentation under threat of perjury; and ultimately do what our competitors would do, which is slip the mailing through acceptance? Surprisingly our industry accepts all of these risks, including jail time, and then charges less per piece than we did in 2006. It was in 2006 that Postal Service engineers were given carte blanche with mailpiece designs and sent mail volume into a death spiral!
Added to the design changes since 2006, we have had to implement numerous intelligent mail barcodes, changes in package/bundle preparation, new (more expensive) tab and strapping material requirements, new rate levels, more complex software, numerous forms of electronic documentation, SOX, and the closing of local facilities. With every change, the complexity of producing mail and our costs have increased. Some of these costs are major, some minor, but in nearly every instance our industry has not passed them on to customers. With every postal change we matched higher production and equipment costs against ever decreasing demand and felt compelled to give away more and more services in a futile attempt to retain customers.
If only the USPS worked as hard at saving mail volume as the rest of the industry!
It is time for the USPS and our customers to GROW UP and face the consequences of their actions. The USPS has to realize that its drive for processing efficiencies is responsible for the significant loss in mail volume. Flats alone have decreased (from 2006 to 2010) by 30%. And yet no one in the Postal Service did a cost benefit analysis on the effects of implementing the new folded self-mailer rules. No one asked if hoped-for processing efficiencies will make up for a significant loss in mail volume. The simple fact is that no one in the Postal Service cares about our costs or mail volume.
Customers need to realize that if they want to print on cheap paper that doesn't meet the new postal specifications, their postage is going to double (auto rates to non-machinable). Customers must also realize that working with the cheapest know-nothing print service provider has very specific, higher costs associated with that option. Meeting stringent postal dimensional and graphic design standards requires a professional to provide the overall lowest cost.
The Postal Service has made significant changes to mailing standards since 2006. MSPs have been losing money by absorbing the additional costs associated with these standards. It is time to charge a reasonable rate for our knowledge, services, and expertise! I have no doubt mail volumes will decline if we charge our customers what it costs to produce their mail, but we can no longer afford to subsidize their marketing efforts. The simple fact is that we (and they) may have to move on to something more profitable.
Todd Butler, Butler Mailing Services, can be reached at 513.870.5060, toddb@butlermail.com or www.butlermail.com.
