In-house production of transactional communications comes with complexities and costs. Most organizations aren’t in the print and mail business, so it’s not a core competency. Even with significant volume, most companies can’t achieve the highest level of economies of scale. So, what are the real costs of in-plant printing?
Hard vs. Soft Costs
In the realm of budgets, hard and soft costs are part of the total. Hard costs are those that are directly related to physical operations, including materials, equipment, and labor. Soft costs are indirect, such as compliance, legal, or other fees.
Hard costs are easier to calculate and plan for, while soft costs are less tangible. Each contributes to your total expenses. They are both increasing.
Hard Costs of In-Plant Printing
Here are the categories of costs and why you can eliminate them with outsourcing transactional print and mail.
Materials
Printing and mailing require paper, ink, toner, and other materials. Although these are a commodity, they aren’t a stable cost. Paper has specifically become much more expensive. There’s typically a lot of waste with it. The best way to maximize paper’s usability is to use the White Paper Factory. In this print framework, users feed large rolls of white paper into commercial inkjet printers, where every page prints.
Achieving the best unit price for these materials necessitates massive volume and special contracts between buyers and sellers. That’s what transactional companies can do, but the average in-plant operation cannot.
Equipment and Technology
To ensure accuracy, quality, and compliance, in-plants need sophisticated equipment and technology. These capital hard costs are significant and also require regular maintenance. You’ll also need to replace them at least every five years.
Outsourcing allows you to remove these expenses and all the additional costs that come along with owning such machinery.
Labor
Skilled labor to operate in-plant printing is likely one of your greatest expenses. You must invest in recruitment and retention. As wages rise, this line item balloons.
Outsourcing enables you to reallocate this labor elsewhere for work that directly ties to your company’s growth.
Postage
Every letter needs a stamp, and this is another cost that increases, usually twice yearly. Postage optimization is hard to achieve unless you’re a professional print and mail house. These companies also leverage other ways to reduce rates, including:
- Presorting and commingling to group like addresses together
- Applying the USPS Intelligent Mail Barcode (IMb) for automation
- Address hygiene to check for bad addresses and remove duplicates
- Soft Costs of In-Plant Printing
- In addition to the categories of expenses above, you’re also incurring soft costs.
Soft Costs
Overhead
Everything about the space where production occurs carries soft costs. These expenses support hard costs in keeping everything running. They include:
- Leasing or mortgages
- Utilities
- Building infrastructure
- Property taxes
- Security (e.g., cameras)
Some of these are predictable, while others are not. You also need to budget emergency funds for facilities for things like water leaks, roof damage, HVAC maintenance, and more.
Compliance and Legal Oversight
Another soft cost segment ties to compliance and legal. Roles within your company or a third party will need to audit operations regularly. They need to provide a sign-off and potential violations to remediate.
By outsourcing, you’ll depend on the experts of your partner. These are usually full-time roles dedicated to transactional print and mail compliance.
IT and Administrative Support
While your entire organization needs IT and administrative support, it is a soft cost of in-plant printing. There’s a portion of time by these two groups dedicated to your operations. Some ways these groups contribute include:
- Ordering materials
- Managing vendor contracts
- Comparing costs for equipment and other items
- Troubleshooting for errors with equipment
- Ensuring data and perimeter security of machinery
- Equipment repair
In-House Printing: How Much Is It Really Costing You?
All these budget items have a line item in operations. Some are more visible than others. The reality is that these costs are rising and often unpredictable. You could be investing more than average, which means other parts of the business suffer.
You can remove all these and simplify by outsourcing. It’s an operating expense only, which is often steady, depending on volume. Transitioning is easy and seamless when you work with a dedicated transactional company like PCI Group. Get started by requesting a meeting with our team.
