How current price increases could affect your campaigns
Does your nonprofit team know about the recent postal rate increases?
These increases are affecting your direct mail campaigns! That’s why it’s important to understand why these postal increases are happening, and how your nonprofit can successfully prepare for future campaigns.
Think of your direct mail campaigns like an orange…When you pay for an orange, you think you’re paying for a simple piece of fruit. But look deeper… there are SO MANY variables and cost factors that go into you buying that simple piece of fruit:
- Weather: If there’s a freeze, the product is lost and the price of oranges increase
- Land: Cost of land/taxes continues to rise
- Workers: Cost of labor continues to rise
- Trucking: Cost of transportation continues to rise
That’s why I say direct mail is like an orange! There are lots of variables and cost factors that go into a simple piece of direct mail. And so many of these factors are affected by postal rates! Including…
- Postage: Due to issues with the USPS, annual postal rate increases are expected to continue.
- Papermaking: Due to a rush in demand upon several paper mills closing their door, the cost of paper will increase throughout the year.
- Transportation: Due to a shortage of truckers and increased demand for deliveries, freight and transportation costs are increasing.
In the months ahead, these cost factors will shift, prices will increase and the state of direct mail will continue to change. These postal rate increases will ultimately affect your nonprofit’s direct mail campaigns! That’s why I want to dive deeper into these changes and help you prepare for what lies ahead…
I’m sharing this article from printing and mailing experts, Walsworth, on how postal rate increases are changing mail today, and what your nonprofit can expect in the months ahead.
Papermaking capacity
Total papermaking capacity in North America has steadily declined for the past 20 years, as has total demand. Newspapers are nearing dinosaur status, as are some magazines. Emails, texts and social media platforms like Snapchat and Instagram have replaced a large portion of the letters, cards, memos and notes that were commonly sent in years past.
In response to less demand, older, less efficient machines were shut down and, in some cases, entire mills were closed due to lack of demand.
“Many buyers, with concern for their supply chain, panicked a little and pre-ordered paper, increased the size of their orders and were padding their positions,” says Gene Shuffler, Walsworth’s Vice President of Corporate Services.
You can imagine that one printer doing this is of little consequence. However, thousands of printers padding their orders at the same time would tend to jam things up a little. And that’s exactly what happened!
Mill schedules filled up quickly, and lead times stretched out. Demand was high! As you might expect, price increases soon followed. Allocations were put in place to control how much paper each printer could order.
Transportation
The competitive landscape of the internet requires differentiating factors to attract and keep buyers. Rewards programs are popular, but nothing sells like free shipping. So instead of going into a store, picking up your favorite item and delivering it to your home in your own delivery vehicle, you click through the order process and a day or two later, merchandise is delivered to your home by… someone else’s delivery vehicle. Driven by a truck driver.
Many surveys are showing that the core interests of millennials include improved quality of life and convenience, among others. If true, then it helps explain why so many trucking companies are having difficulty finding replacement drivers for their aging workforce that is seeing retirements at all-time highs.
Younger people don’t like the idea of long hours apart from their family and friends. Couple that with the surge in deliveries from internet providers and you have a perfect storm of increased demand and reduced capacity.
In addition, the federal government implemented mandatory on-board tracking devices for all trucks to ensure that drivers were following the regulations regarding number of hours driving in one day, appropriate rest breaks, etc. It’s estimated that this requirement reduced the overall capacity of the trucking industry by approximately 8%.
Fuel is also a key component of the cost of delivery. The price of diesel remains very high, even though gasoline grades reduced significantly this past year. All of these factors combine to create a very difficult market for trucking.
So what does this mean for your organization’s programs? You can expect the cost of printing and shipping to increase and thus, the price of your direct mail campaigns to flux.
But… unlike the ever-changing rates of oranges, BDI works to keep our client pricing static throughout the year. Only on an annual basis do we potentially review and raise our costs. So while your costs may not go up in a given year, it’s still important that you anticipate cost changes annually and map out a solid donor communication strategy.
BDI is here for you! As the information hub of all things changing in the world of mail, we’ll keep you updated on the latest news and deliver expert advice on how you can manage these changes in your campaigns moving forward.
Check out last week’s Quick Shot – “Taming the Monster” >>
Source: “A Closer Look at Materials Costs and Price Increases” – Walsworth
