Can We TalkAbout Pricing?

Talking about pricing at association conferences was always a strict no-no, with notices in every conference program advising members of what was not appropriate for discussion. Talking price risked the appearance of anti-competitive actions.

As it turns out, though we can’t talk about this stuff, we can study it, and that is what the Mailing & Fulfillment Service Association did in its first-ever pricing study. MFSA’s study, published in July, is based on pricing of mailing services by a sampling of more than 170 mailing services firms. Though studies have been done in the past by regional organizations, this is the most extensive survey of its kind the industry has undertaken.

In the past decade, prices in the mailing industry often have fallen or stayed flat as buyers of the services have grown more sophisticated and print and production buying organizations have driven prices down. While buyers can view the prices of an array of mailers, often using that information to drive prices lower, mailing companies have few resources to see where market pricing is.

Competitors are unlikely to share pricing information, and customers can be a less-than-reliable resource – they have an interest in lower prices. Quality mailers often are called upon for postal and production expertise, and they are resisting commoditization of their services. MFSA thinks knowledge can help mailers better maintain value in their pricing formulas by having a sense of where the market prices historically have been. In accordance with antitrust provisions, the study is based on historical pricing as of Jan. 1, 2005, rather than current pricing.

Just how much does it cost to lick a stamp? Turns out it depends a lot on how many stamps are being licked and in what part of the country. MFSA looked at these variables and more to devise a picture of mailing services pricing.

The study covered many operations, including data processing and lettershop services. Pricing was based on four quantities: 5,000, 50,000, 100,000 and 1 million. These quantities were chosen as representative of a broad variety of mailing services companies. The study was not designed to create a pricing sheet for a mailer, but to provide benchmarks against which mailers can measure their pricing.

No bargain-basement region. The study was broken into five geographic regions so users could compare their prices with the local market. So is there a bargain-basement market where you can get envelopes stuffed for a song? As it turns out, pricing was surprisingly consistent nationwide. Though a few metropolitan areas tended to be a bit higher (or lower) than others, generally the difference among regions was not dramatic.

Cost of living didn’t necessarily drive price, either. The Washington-Baltimore area is an expensive place to live but was often among the less-expensive service providers. This is probably because of the many mailing services in the area. It’s a very competitive market.

Unsurprisingly, the center of the country tended to be a bit less expensive than the coasts overall, but the differences were generally small and inconsistent. Go ahead and have your self-mailer ink jet addressed in Denver – they’re cheaper than the national average – but don’t let them tab it. You’ll need to send it to Cleveland for that. And you can get a great deal on inserting your #10 envelopes in Los Angeles … but don’t let them fold the inserts … or store the material afterward. In those areas they’re higher.

Get some bids. From the buyers’ perspective, they can get a much better idea of pricing in their market by getting competitive bids from vendors they trust. The survey might assuage fears that they are missing out on a bargain elsewhere in the country – they aren’t – but they already have the means to do their own survey: get some bids.

For mailers, seeing actual pricing numbers can be a revelation. The study was designed for mailing services providers who need to know that their prices are at least within the market norm. In developing pricing for mailing services, the study can serve as a valuable tool. That was its primary intent. Though there has been no official decision, it is expected that MFSA will follow this study with others in coming years to measure trends in pricing in the industry and cover new services as they develop.

And as to the original question, how much does it cost to lick a stamp? It turns out that stamp licking is a dying art and not in the study. But you can get a self-adhesive stamp affixed to a #10 envelope for about $6 a thousand on average.

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