Ten Numbers to Crunch For Cost-Cutting Publishers

Publishers, if you want to save some money, you had better whip out your calculator -- uh, spreadsheet.

Publishers can usually get more savings from changing what they do rather than from getting lower prices on what they already do. Changes that save money can also reduce revenue, so you can't just cut blindly. You need to have a clear picture of both costs and revenues.

Here are calculations that can shed light on money-saving opportunities:

1. Cost Per Copy: That's easy. You just divide your costs by the number of copies, right? NO! That would give you an average cost per copy, but average cost doesn't tell you much. It will mislead you, for example, if your publisher wants to know how much you would save by reducing your ratebase. What you usually need is the incremental cost per copy -- that is, the expenses that result from each additional copy. Such fixed costs as prepress and makereadies are not part of the calculation.
   
   
2. Cost Per Copy By Type of Copy: Production costs are generally the same for each type of copy, but distribution costs can vary widely by method of distribution. A copy that costs 2 cents to send to a domestic newsstand wholesaler might cost 25 cents to mail to a domestic subscriber or $2 to an overseas subscriber. So the potential savings from reducing ratebase might depend upon what type of copies are eliminated. Drill down further and you might discover that you should stop soliciting subscriptions in Hawaii or should raise prices in Canada.
   
   
3. Cost Per Editorial Page: Again, we're talking about incremental cost -- the cost of adding or removing editorial pages. For many publications, more than half the production and distribution costs are insensitive to page count. Because you can't add just one page to a publication (though I've heard people ask why not), you might have to model different scenarios to get a picture of the typical incremental cost per page.
   
   
4. Cost Per Ad Page: The prepress costs per ad page are typically lower than for editorial pages, but the postage costs for U.S. copies can be much higher. In fact, because of the editorial discount, some publishers have a negative postage cost for additional editorial pages.
   
   
5. Inefficient Page Counts: Sometimes you can save money by adding pages because you are moving from an inefficient to an efficient press configuration. If you use 32-page web presses, it can take five presses to print 92 pages but only three to print 96. Knowing that some page counts are inefficient might lead to new makeup rules (e.g. the number of body pages must be divisible by 8) or to greater use of remnant ads, house ads, standby editorial pages, and other methods of adjusting to last-minute changes.
   
   
6. Distribution Cost Per Pound: A lot of publishers are looking at reducing basis weight or changing trim size these days. The paper savings are easy to calculate, but you won't have the full picture unless you know how much you pay in freight and postage for each pound. "Heavier Paper Can Save Money" has more resources on this subject, including the need to adjust for waste and why you might want to break out these costs by type of copy (e.g. newsstand vs. domestic subscriber.
   
   
7. Cost of Versioning: Having different versions of a publication can lead to a variety of additional costs, such as press makereadies, press stops, inefficient press forms, selective binding, and polybagging. Dwarfing all of those for some publications is the hidden impact on postage. Mailing public-place copies separately from subscriber copies, for example, increases piece costs and reduces dropship discounts for both groups. The same thing happens when complimentary copies or copies with special onserts or cover wraps are mailed separately from other copies.
   
   
8. Benefits of Versioning: Having a separate women's edition or putting cover wraps on expiring subscriber copies might be worth the extra cost if they generate enough money. But take a close look. In a time of declining ad pages and reduced ratebases, a versioning program that used to make sense might have outlived its useful life.
   
   
9. Costs of Inserts: There are horror stories about sales reps letting advertisers run supplied inserts for free if they also buy an ad page, under the mistaken assumption that the advertiser bore all the costs of the insert. But whether supplied or "we print", inserts increase a publisher's postage, freight, and bindery costs and often lead to inefficient makeup. That goes for circulation inserts as well.
   
   
10. Inserts Revenue: This is another case of focusing on profitability, not just costs, by seeing whether the revenues justify the expenses.