I recently saw a listserv post inquiring about the pros and cons of moving from postcards to full page bills, as well as asking about the costs associated with making the switch. In the same vein, I know we have customers who have resisted transitioning from postcards to full-page bills due to the increased costs, primarily postage.
Postal rate increase
A postage rate increase went into effect on January 27. You can see these new rates here. Using these new rates, let’s examine the difference in postage between postcards and full-page bills.
If you use an outsource printer, they will perform the CASS certification and presorting to qualify for the best possible discount. Under the new price structure, automated presorted mail sorted to the 5-digit ZIP code now costs $.383 per piece. This would include the majority of your bills that are mailed to local addresses. Bills mailed to out-of-town addresses will be slightly more, depending on how many are mailed to the same 3-digit ZIP prefix.
The best rate for a postcard is $.257 per piece, but you have to be using CASS certification software to be eligible for this rate. If you are just presorting by ZIP code, without using CASS certification software, the rate is $.28 per postcard. And if you’re not presorting at all, you’re paying the full rate of $.35 per postcard. For purposes of this illustration, let’s assume your software prints postcard bills in ZIP code sequence and that’s the only presorting you’re doing. Here is the comparison between postcards and first class postage:
Difference in price alone
The above illustration shows nearly a 27% increase in postage cost for switching from postcards to full-page bills. What this doesn’t take into account is the intangible benefit of being able to present more information on a full-page bill and being able to include a return envelope
In addition to the intangibles, using an outsource printer results in very tangible labor savings in your office. Your staff no longer needs to attend to a printer printing bills or prepare the bills for mailing. This is all handled by the outsource printer.
Another way to offset the increased cost of first-class postage is to offer ebilling and encourage your customers to request ebills rather than receiving a paper bill in the mail. For each customer who opts in to ebilling, you save not only the cost of postage associated with mailing their bill, but also the cost of the paper stock and envelopes.
If you can convince 27% of your customer base to opt-in to ebilling, the switch from postcards to full-page bills will result in no additional cost! Depending on the demographics of your customer base, this percentage is not unreasonable.
Need help deciding?
Are you trying to decide if moving to full-page bills or outsourcing your bill printing would be cost effective for your utility? If so, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org to learn how a business review could help inform your decision-making process.
© 2019 Gary Sanders