Mailing Systems Technology - July/August 2008 - (Page 13)

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. SPEED IS MORE important than the price tag. 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. When considering inkjet addressing equipment, 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. Furthermore, if choosing the printer that Knowing I would be met with some skeptiyields 34,000 pph, then the slower machine cism, I ﬁlmed our crew and loaded the video on my Apple iPhone. I did this to show those investigating inkjet choices, but also PRINTER A because it’s simply fun to watch 28000 pph with 2 people a blur of postcards speeding by and ink @ 25¢ per 1,000 that are individually addressed (a) 8-hour day and sorted at the rate of 567 per 224,000 (b) Ink cost for the day minute (or nine every second). $ 56 At a price of $20 per thousand, (c) 8 hrs x no. of people x $15 hr the gross revenue is more than $ 240 (d) Labor + ink (b+c) $675 per hour. TABLE 1 PRINTER B 34000 pph with 3 people and ink @ 45¢ per 1,000 272,000 $ 123 $ 360 $ 483 $ 5,440 $ 4,352 $21,760 $93,568 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 (e) Gross Revenue (a x $20/1,000) (f) 80% productive per day (e x 0.80) (g) x 5 days per week (f x 5) x 4.3 weeks per month (g x 4.3) $ 296 $ 4,480 $ 3,584 $17,920 $77,056 DIFFERENCE PER MONTH = $16,512 ADD’L MONTHLY REVENUE WWW.MAILINGSYSTEMSTECHNOLOGY.COM | JULY-AUGUST 2008 13 http://www.mailingsystemstechnology.com

Table of Contents Feed for the Digital Edition of Mailing Systems Technology - July/August 2008

Mailing Systems Technology - July/August 2008 Contents Editor’s Note Peer to Peer The Economics of Inkjet Addressing Virtual Mailstream Management Guarding Your Internal Documents Top It Off With Training Implementing Digital Mail Saving You Money Kate’s Slate Products & Services Advertiser Index Sho Time Who’s Who Company Profiles BCC Software BÖWE BELL + HOWELL Collins Ink Corporation Datatech SmartSoft Endicia Hasler, Inc. Kern, Inc. Kirk-Rudy Mail Quip, Inc. MCS, Inc. Melissa Data MidSouth Technologies, a NPI Company Neopost NPI Parascript Pitney Bowes Inc. Rena Systems Satori Software, Inc.

Mailing Systems Technology - July/August 2008

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