How Much Profit Did You Add from Mail Tracking Last Month?
September 6, 2019   Dave Lewis

Successful mail service providers know that it is not easy to make a margin on services these days.  Making a profit on just print and mail production in this highly competitive industry is tough.  So, what resourceful service providers (defined as those still in business) are doing is adding other services that improve quality and service for their customers and allow the provider to add margin and profit for themselves. Commingling, shipping, freight…and mail tracking? Commingling and freight have long been seen as a means of saving the customer money by combining their mail with the mail of others.  The mail service providers leverage their bulk buying power by combining the mail of multiple customers – it’s a win-win.  The customer saves money and the mail service provider is able to share in the postage savings.  More and more, we’re seeing it work the same way with mail tracking. For example, a provider with a volume of a few million pieces a month has been tracking every piece of mail for all of their clients.  High volume can allow them to drive a better price on tracking.  Before this year, they gave the service away to their clients – it simply added to the level of their service and was seen as the dreaded “cost of doing business.”  Clients do indeed love mail tracking – it has real value to them.  If they can get it free - great, but if there’s a reasonable charge that’s OK, too.  It’s worth it. So earlier this year, this same MSP started charging for mail tracking.  They added it as a line item to every invoice and estimate.  In the grand scheme of things, it’s a minor charge, and they have gotten virtually zero push back from customers.  As best they can tell, with hundreds of estimates done in the past few months, they have not lost a single one due to the tracking charge, nor had anyone asked to remove it.  And this is largely in the infamously tight-fisted nonprofit segment. The bottom line to their bottom line:  Mail tracking has gone from a “cost of doing business” to a profit center.  They’re typically adding about $2,000 a month to their profit from mail tracking—and it’s justified by providing a valuable service that takes knowledge and effort on their part.  With the fall mailing season coming, they’re hoping to add $25,000 - $35,000 to their bottom line for mail tracking for the year.  That’s not revenue – that’s profit. We are seeing this trend with more and more resellers.  Providers that sell print as well as mailing services find it easier to add tracking charges, as the total estimate is larger to begin with. Pricing models that work What should you charge for mail tracking?  Well it depends largely on how many mailings you do and their size.  For larger mailings, say over 50,000 pieces, the market will generally tolerate $1 - $2/M with little impact.  As they get into the 200,000+ range pricing may become more sensitive. If you do smaller mailings, you may want to consider a fixed price per job or split.  We have seen mailers charge fixed fees from $25 all the way down to $5 profitably.  It all depends on your product mix. The key to profitability is getting an affordable cost for a premium product, and volume is the key.  The more you are tracking on a monthly basis, the lower your cost.  And, with SnailWorks’ Visibility+ tracking, there are no per-job costs.  You’re paying a simple cost per thousand.  Many of our resellers simply track all mail and charge where they can.  They may have fixed price contracts that don’t allow it, but from a process and cost perspective it is often easier and more affordable to track it all and secure a better price.  If you’re paying less than $1/M, it’s no big deal if a 5,000 piece job gets tracked for free. So don’t look at mail tracking as a cost center – it should be a profit center, putting extra dollars directly to your bottom line.  Of course you need to provide world class tracking services to match your excellent service – contact us and we can suggest someone.  And we can work with you to help you develop a profitable mail tracking program.

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