Skip to main content

Understanding Postage Costs

By August 20, 2021News
Understanding postage costs | Quadient

Understanding postage costs

All businesses strive to manage costs. They do this by accurately forecasting outlay, procuring products and services that deliver value for money, and comprehensively tracking costs. Customer communications is no different; efficient and effective mail management helps avoid unexpected costs, optimises postage spend and provides clear insight into where spend was incurred. 

A range of business costs

Business costs are classified as:

  • Variable – that change with the level of output, for example ordering more supplies to meet a higher volume of orders
  • Fixed – constant regardless of output volume. These costs include rent and salaries
  • Direct – costs generated by specific product or service processes (can include variable and fixed costs)
  • Indirect – costs that don’t link back to a specific activity or process. These include depreciation and some administrative expenses.

Customers like receiving mail

All businesses use a number of channels to communicate with customers and stakeholders.

Digital channels are increasingly popular, but physical correspondence remains a valuable channel in the communications mix. Many customers prefer physical correspondence: it is physical, often easier to browse and can be the most effective channel for reaching certain demographics. Even Facebook – known globally for digital services – launched a print magazine in order to reach its executive audience.

Manage postage spend with a franking machine

How companies manage their outgoing mail can have a big impact on resources and costs. When businesses start out, they usually pay postage through pre-paid adhesive stamps. However, managing post in this way is time consuming, becomes less manageable as mail volume increases and is likely to result in items being stamped inaccurately. That can mean items either don’t reach their destination or the business overpays to send them.

Furthermore, employees have to physically go and purchase stamps – another drain on resources and an obstacle to mail items getting out on time if stamps have run out at just the wrong moment.

Tracking and controlling the cost of postage is difficult with stamps. It’s a manual process that fails all three of the cost management techniques described earlier:

  • Accurately forecasting outlay – this is a challenge when there’s no record of previous spend
  • Effective procurement – stamps cost what they cost; there is no cost optimisation
  • Cost tracking – without an accurate record, there’s no way of knowing which parts of the business spent what on postage.

franking machine provides another way, to make the job of managing outgoing post easier, and to introduce effective postage spend management.

Users pass the envelopes or postage labels through the franking machine where they are stamped with the exact postage required. Accuracy is assured through integrated weighing scales, so that users don’t overpay. What’s more, franking rates are often cheaper than stamps, and national postal organisations – such as the Royal Mail in the UK and La Poste in France – offer specific franking services that can make costs even cheaper.

The cost of time that used to be spent buying stamps is also saved. Lastly, franking machines enable businesses to effortlessly track postage spend by specific jobs or departments for better management information. This supports business planning and cost estimating and reporting. Communications costs incorporate the time invested in managing outgoing mail and the cost of sending. For more information on how a franking machine can help your business save on postage spend, improve mail management productivity, and simply and easily track and control costs, take a look at franking machines from Quadient.