Every cost in your company has an impact on revenue. In a time when cost-cutting and profit optimization are essential for a healthy business, you may not be aware of how some business functions affect your bottom line. In-housing printing of transactional mail is one such component. Outsourcing this to experts helps you protect your profits.
The Real Cost of In-House Printing of Transactional Mail
All the expenses related to in-house printing are on your budget sheet, but you may not have clear visibility into the total cost of ownership for an in-plant. There are both capital and operating costs. They can vary widely from month to month, and taking advantage of economies of scale is much more difficult for a single organization than for a transactional print and mail company.
So, what are the real costs?
Paper, Ink, Toner, and Materials Expenditures Continue to Rise
To operate an in-house print and mail facility, you will spend considerably on the materials for production. At the top of the cost list is paper, which has been rising steadily in the past few years. First, this was due to pandemic shortages. Even though there’s been recovery, inflation has paper costs inching up rather than decreasing. There’s still lots of competition for this product, as numerous industries need it for commercial operations.
Because you buy on a small scale, discounts are out of reach. A commercial printer, however, can negotiate more favorable rates because of the volume they require. As customers adopt digital-only communications, you will see the number of mail pieces decline but not your paper costs.
Along with paper, you need a steady supply of ink, toner, and other materials. You face the same challenges with getting the best deals here, too. Some ink is highly specialized, like that for check printing, which adds more expense if that’s part of your in-plant printing.
Printing Equipment and Technology Are Significant Capex Costs
Transactional print and mail has unique requirements versus promotional mailings. As a result, you need advanced equipment and technology. It’s not just the inkjet printers that require expert maintenance and upgrading. Intelligent insertion machines are crucial to ensure the accuracy of mailings. Figure into your Capex budget that you’ll need to replace these every five years.
You may also have expenses around physical servers to store data and the software that drives the equipment. You may also need applications to track transactional communications through the mail stream.
On the low end, these things will cost your business millions annually.
Wages for Labor Are Increasing
Wages for labor in the U.S. have been volatile in the past few years. As of September 2023, they were up 5.2%. Many industries are still struggling to find workers, making pay even more competitive. It’s the most expensive part of running a company, and those you need to operate your in-plant have specialized skills, which affords them a higher wage. In addition to this type of worker, you also need to employ compliance personnel.
As a cost category, you can’t expect this to be a place of savings. Even as automation becomes more functional, you still need skilled employees to manage processes, machinery, and quality.
USPS Postage Increases
The USPS raises its rates regularly now. You can view an update on 2024 fees here. The way to reduce postage costs is to have processes in place for:
- High-volume presorting
- Reducing waste from inaccurate or duplicate addresses
- Taking advantage of the USPS IMb, a 65-bar Postal Service™ barcode to sort and stack
- Commingling completed packages by categorizing letters by ZIP codes
Unless you’re a print and mail company, you’ll have little access to these postage optimization capabilities. Even if mailings drop, you won’t get much relief from these costs.
Operational Costs Are Hard to Keep Down
Finally, there are the other expenses related to operations and the space itself. There’s leasing the space, utilities to keep it running, insurance, security and access systems, and any other cost tied to the facility. Depending on your location, commercial real estate is rebounding, so finding a substantial deal isn’t likely to be possible.
In-House Printing of Transactional Mail Impacts Profits
You have an obligation to send compliant, accurate, and high-quality communications to customers. The costs associated with it directly affect your profits, so why not zero most of these costs out and treat this function solely as an operating cost by outsourcing?
Transitioning to outsourcing puts experts in the role of delivery of print and mail. You can expect to save money and improve accuracy, compliance, and quality when you partner with PCI Group. We have a long history of helping companies go from in-plants to an outsourcing model with significant results.
Learn more by contacting our experts today.
