How much should I budget for direct mail?
Direct mail costs vary greatly from one campaign to another.
Your budget will be determined by mailer format, list selection, print/mail quantity, level of personalization and postage rate. It was will also depend on the agency, freelancer, consultant or other service provider you hire.
Your direct mail format drives your costs
Aside from the obvious quantity differences, what most impacts costs is the format you choose.
At the low end is the postcard which can be printed for just pennies apiece.
At the high end is the multi-insert letter package that includes a multi-page letter, brochure, additional inserts, a reply form and a reply envelope all enclosed in an outer envelope.
You may need something in between.
Which format you choose should be determined not by your budget, but by your objective. Low-cost formats work well when your offer is free and easy to understand. High-cost formats are needed when your message is complex and your offer requires a high financial commitment.
Fixed costs and variable costs
Whichever format you choose, your budget will be broken down into two categories – fixed costs and variable costs.
Fixed costs are those costs that remain the same regardless of the quantity being mailed. They typically include your creative costs, project management costs and account service costs – in other words, your agency costs.
Variable costs cover your mailing list rental, printing, mailing and postage. These costs change with quantity. Larger mailings provide a reduction in unit costs largely because of printing which offer significant economies of scale.
Actual costs for creative services can range from less than $1000 up to $10,000 and more depending on the complexity of the project and the service provider. As with most industries, large agencies tend to charge more than small agencies. And small agencies will charge more than freelancers.
Actual costs for production (lists, printing, mailing, postage) can range from 50 cents to $2-$3 per package. Again this depends on the package specifications and the quantity.
The good news is that many direct marketing applications work very well with simple direct mail packages.
If you’d like to discuss an upcoming campaign – or if you’re looking for ways to improve an existing mailing program – call us and let’s schedule an introductory call.