Estimating Direct Mail Costs

November 18th, 2019 by

If this is your first campaign, you need a way of estimating your direct mail costs.

Let’s face it, we all have a marketing budget. And, we need to make sure we are maximizing our response rate and getting the biggest bang of our buck.

First of all, we know that direct mail is a winner. 2018 statistics from the ANA/DMA show that the median direct mail response is a whopping 9% for mixed house/prospect lists and 6% for prospect lists alone.

Compare that to digital media.

OK – you’ve made the wise decision to use direct mail. I suggest you start with a small mailing to get your feet wet. So, what constitutes small?

When it comes to postage, if you are considering a mailing of fewer than 500 pieces, consider 1st class mail. If you are considering a larger mailing, which we call a bulk mailing, you will do better with the USPS marketing mail.

For the purpose of estimating your direct mail cost, let’s base this budget on a mailing of 500 pieces using 1st class postage.

Now, let’s figure out what it will cost you.

Decide on the type of mail you want to send:

  • Postcards. Postcards are an affordable option with a wide reach. They are typically read in greater numbers than other mail. In the past year, USPS statistics are showing a 3.9% increase in postcard response. Postage for postcards is $0.35/each
  • Folded self-mailer. Folded self-mailers are secured with glue or stockers. They cannot be stapled. Self-mailers also do not require an outer envelope. There are requirements for paper weight and type of folds for this style. Most of the time, this is an 8 ½ x 11 sheet tri-fold. Postage for a folded self-mailer is $0.50/each
  • Sealed envelope. If you are considering a more professional looking or sending something that might be considered private you would use a letter in a sealed envelope. If you want to up your response, add a personal touch on the envelope to set your letter apart. Postage for a sealed envelope is $.50/each
  • Anything bigger than a standard letter but smaller than a parcel in weight or dimension (such as a magazine) must be mailed as a flat. Postage for a flat that weighs under 4 oz. is $1.22/each.

Design

The USPS gives up some general pricing for estimating your direct mail cost. This incorporates the printing costs as well as cost for hired designers.

You can either do it yourself or hire and outside designer to create your mailer.

These prices give you a range of what you can expect.

  • Do-it-yourself. There are online design tools you can use to create your mailer. Or, use your printer as a resource. Estimate $0.32 – $.0.45/each
  • Hire a designer to create your piece. Their rates vary. If you outsource, estimate $24.21/hour. Plus add the cost to print. $0.32 – $0.45 per piece. BTW – I have used Fiverr for the design of my marketing materials. A simple design typically ruins about $40.

What type of list will you use?

  • House list. These are the names and addresses of your current customers. This list costs you nothing, as long as it is up-to-date and accurate. If it’s not, you are wasting your time and money. There are ways to clean and update your data.
  • Purchased Prospect List. Work with a reputable mailing list provider to find the right list for your offer. Make sure to narrow it down to the best possible prospects. While this scenario is based on a quantity of 500 pieces, most mailing lists have a minimum purchase. You need to keep this in mind when you do you are estimating your direct mail costs. Prospect lists vary in price depending on complexity. The USPS estimates the cost for a prospect list between $.02 – $.30/each. A general list of homeowner with age & income will run you about $.06/each

OK – now it’s time to do the math.

Mailing 500 self-designed postcards to you house list, 1st class – will cost you anywhere between $0.70 – $0.90/each. A total outlay of $350 – $450 dollars.

Response rate is based on a several variables:

  • Mailing List
  • Mail Piece
  • Offer
  • Timing

If you’ve done a good job with your direct mailer, your list is accurate and well-targeted and you are using a solid offer, you will get a good response.

Let’s go back to the 2018 median direct mail response rate study. The median response on a house list was 9%. In that case, you can expect 45 responses. If you didn’t get anywhere near that, you need to go back to the drawing board. Above all, you need to test and tweak until you get it right!

NOTE: If you want to estimate your direct mail cost with larger quantities and using discounted bulk mail pricing, go to the direct mail calculator on the USPS website.

 

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