Master Manufacturer: How to Do a Co-Mail Analysis
I’m always surprised that even when given the actual USPS 3541 forms, which contain that exact information, mailers will still use different figures. The main reason is that some versions are too small for the qualifying minimum on the mailer’s equipment. Each version requires its own station, and the mailer may decide to mail some versions by a different method. However, those copies still need to be accounted for.
Chances are that the mailers are going to propose one of two prominent methods, generally referred to as Shared Savings and Flat Percentage.
Flat Percentage Rate (FPR) was developed by Quebecor World in response to publishers’ difficulty in grasping the “moving target” concept of postage. It is very difficult to budget a number that changes with each issue. FPR, however, is very easy to calculate; it’s constant and predictable. It includes all of the highly volatile costs, such as freight, fuel surcharges, administration and, sometimes, list management.
Postage is calculated by using the direct-entry figures, as if your magazines were entered into the postal stream at the closest delivery unit to the printer. From this amount, the mailers will offer a discount as a flat percentage. At first, 10 percent was the standard. As with any generalized pricing structure that includes variables, it has to be priced so the vendor will not lose money. Conversely, that price is higher to cover possible increases, but easily sold as a matter of convenience and predictable numbers for budgeting.
The mailer retains the difference between what it charged you and what it paid the post office.
While FPR provides the comfort of knowing what the savings will be, it doesn’t maximize what the savings could be. In other words, given a total co-mail pool of 500,000 or so, the FPR may be a fair price to pay. However, if the vendor’s co-mail pool is more than 2 million, the actual savings could be more than 20 percent (compared to the 500,000 pool) for each event, in which case, you could be missing out on additional savings. In the end, FPR does not allow for transparency of actual costs—often, additional costs for shipping your books to a co-mail facility are wrapped up in this fee as well.