Reduce Direct Mailing Costs??

Question

Morning BP!

My partner and I are ramping up our Direct Mail Marketing Campaign. Right now we are sending out ~500 letters a month to motivated sellers. We are able to do this for 61 Cents per letter.

Stamp = 50 Cents

Envelope = 4.1 Cents

Paper = 1.2 Cents

Stickers = 1 Cent

Address Labels (2) 2 Cents = 4 Cents per letter

Ink = ??? (Having trouble calculating this number)

Any suggestions on how to reduce the cost even more? I would love to be able to reduce the cost of the postage stamps as well as some of the materials. Any suggestions on places to buy materials in bulk?

We are not looking to do post cards just yet. We are sending letters to our Driving for Dollars list and we want the letters to be more personal.

Thank you for the help!

Scott

David Wurzel · Answer

@Scott Graham

This isn't rocket science.  If you're sending out only 500 a month go to or call

Boston BMEU

United States Postal Service

25 Dorchester Ave Door 80Boston MA 02205-9651

Print out a USPS form 3615 and apply for your Bulk Mail Permit.

Do the online webinar they will set you up with.  It's so you learn how to use the IMSB program.  That stands for Intelligent Mail Small Business.  (Google it and read the free online guide.) You will learn the various ways you can save up to half the price of your postage without the product looking like junk mail.  And when it comes to ink look for any printer where YOU can refill the ink.  I do 500 and it's a breeze.  In fact I'm ramping up to do 1000 and believe me, I'm not paying $500 in postage for it.  When I took my pieces to drop off at the post office the supervisor told me I had to print my envelopes and handwriting was not permitted.  I told them to look closer.  So, if that and the precanceled stamps used are good enough to have a post office official take a second look I think I'm doing pretty good.  And time, nothing to it.  Only, and only, if I were doing over 3000 would I even think of considering an outside vendor.  You can PM me for more info including the phone number for the Boston BMEU.  It won't let me post it here.

Jerry Puckett · Answer

Good stuff man. So, how much time did you invest in the getting of the permit, the webinar, the learning curve? How much for the permit? I hear "time, nothing to it"....but how much of your time does it actually take to produce 1000 letters?  Just hand stuffing and stamping letters on average goes at about  200 pieces per hour....so 5 hours just for assembling (not including print, etc). That's after hours or weekend family time....

All @Mitch Messer and I are getting at is that it's important to consider the whole cost including your time. Unlike money, which there is always more of, once your time is gone, it's gone.

BTW, the Epson Workforce R4640 has large tanks of refillable ink and we figure the cost at roughly 2 cents per page.

I'm not fond of the results I get through bulk mail. In general, I'm not fond of tripping over pennies on my way to dollars.

Jerry Puckett · Answer

Hey @Scott Graham,

At the risk of sounding like a letter salesman, you're actually offering up a very costly alternative from the perspective of a serious Investor or Wholesaler. Let me explain. What follows is largely an excerpt from what was essentially the same conversation a couple of years ago. It cycles back around every so often.

How much time did it take you to complete this task start to finish?  I suspect that even at 500 letters it likely took more than 5 hours. For a run of 1000, even with all supplies on hand,, a minimum of 8 hours...that's a full day's work! What is the cost of your time? What do you make in your day job?

I value my time at $100+ an hour. That run of 500 would cost me $1500+ But let's say $20 an hour...it costs more than $100 in addition to the supplies to produce 500 pieces. People in this business, especially the newer ones often forget to pay themselves which is one reason so many fail.

Your time is your most important asset....the opportunity cost of your time is very high. Using those hours to better understand the market, talk to sellers, network with your team....all likely to produce higher returns.

So in  the end, which would you prefer? Spend your time marketing, or making deals?

On the other side of the closing table, cashing that big check, trust me, you're more likely to say "wow that was a lot of work, how can I make this easier?" than "woo-hoo, I saved $100!". Just sayin'

Mitch Messer · Answer

@Scott Graham First, thanks for the vote! Always much appreciated.

The only way I know to drop your material costs is to buy in bulk and/or online. For example, I just found #10 envelopes for 1.3 cents online.

For the record, though, not paying yourself  doesn't make the assembly and handling expense go away: It just means you're prepared to absorb that cost for now. I definitely get that, believe me.

But while that may make sense at 500 letters per month, it probably won't at 2000. And when you are ready to outsource your mailings, the only way you'll be able to make an honest apples-to-apples comparison is to know what your actual costs are to fold, stuff, label, stamp and mail each piece.

Because I bet you're "paying" way more than you realize to do it yourself.

For example, I've used Click2Mail's email-to-mail service to mail 8.5x11 letters in a 6x9 envelope with first-class postage, one at a time, for 84 cents each. No minimums; no monthly contract.

Your assembly and handling labor would have to be under 24 cents per unit to beat that, and maybe yours is. But if not, you might be better off letting Click2Mail do it.

And unless you actually track the expense, you'll never know.

Johnny Kang · Answer

@Scott Graham, I would have to agree with what @Jerry Puckett said.

I've done both; Did it in-house, as well as farm it out. Calculating the cost of everything (Regarding your ink toner, if you're using a laser jet, it should tell you the estimated yield, so you just divide that by however many pages you're printing), downloading handwritten fonts to Word, even getting my Bulk Mail Permit, etc., but it's just not worth the time & the headache doing it yourself. (and this is all even before taking into account all the returned letters you're dealing with currently sending out 500/mth) ;

The convenience of sending a list to another company to handle all the outbound letters, far outweighs the extra added expense. The quality of those letters doesn't compare to the ones you print yourself. They use heavy duty, high speed special printers that cost anywhere between $15,000~$30,000 depending on the model (which I've considered buying), not to mention the type of font they use, as well as how the ink prints on the paper they use, also being different than the ones retail buyers have access to.

One thing you might want to think about is, the type of leads you're sending letters to. If you can refine your target list, so there's higher motivation, you can reduce the # of letters you send out for a higher closing ratio, and increase your overall ROI.

I've switched over to using the phone as my primary method of reaching sellers. The 2 lead sources I mail & call are super targeted, so I might send out about 50~100 letters/mth depending on the month.

Mitch Messer · Answer

Hi @Scott Graham. Are you sending these out yourselves, or is this through a mail house? If you're doing it manually, then that assembly and handling expense needs to be factored in as well. And that would lead to my best suggestion for cutting costs: Let someone else (a mail house or an online outfit like Click2Mail) perform the labor tasks for you.

Account Closed · Answer

@David Wurzel has good advise on the bulk permits. As part of your research, find out about savings when you present documentation from your list broker. Not all companies provide the NCOA (National Change of Address) or CASS (address standardization for deliverability) certificates.

By working with a list company that utilizes these processes, you can save on postage for the bulk permits. Just as important, you won't be spending on printing/postage/materials to put a stamp on as many envelopes that can't be delivered.

Scott Graham · Answer

Hi @Mitch Messer! I am manually putting these letters together myself. I am not paying myself to do the work - so there is not assembly or handling expense. If I were to outsource to a company like Click2Mail, the cost would increase because I would be paying for them to assemble and handle the letters. From what I have seen, mailing companies can get the price down to 71 Cents per unit if you have them mail out 5,000 letters per month for 6 months. Right now, I am not in a position to pay for that kind of service. Companies are charging around 89 Cents per unit if I have them mail 500 letters for 6 months. Since I am able to put together a single letter for 60 Cents, there is no reason for me to outsource the work.

Do you happen to know of any places to get mailing materials at an inexpensive rate?

Reduce Direct Mailing Costs??

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