Direct Mail In-house vs Outsourcing?

22 Replies

I'm preparing to send my first wave of direct mail in the next couple days (planning to buy the list on Saturday [600/700 or so] and yellow letters on Sunday) and I've sort of been ignoring the idea of doing direct mail "in-house" because I don't fully know the details. I'm starting to believe that I could be saving some money by doing it that way. Also, please describe what "In-House" fully entails. In my head i picture a some empty room with a printer on the floor and stacks of paper everywhere, having to drive to the post office and handing them a list where they hand type every address one by one. 

Im hoping to hear from people on both sides. Outsourcing seems less time consuming and overall easier.. but more expensive. In-House seems cheaper but more of a hassle and time consuming. 

Please enlighten me fellow BP'ers! Costs, time, headache, printers, paper, postage, hoopla...

It's definitely worth considering your time doing your DM campaign yourself vs the opportunity cost of that time. When you invest into outsourcing the campaign it's a crapshoot if you're going to recoup your investment . . at all.  But .. it's the same if you do it yourself too. So the difference in price between what you spend to outsource it vs what you save by doing it yourself - is it worth your time? For me, it is and it's just the cost of doing business. 

Others will have more specifics to share.  Good luck!

ok, where do I start?  Postal permit $220 per year.  This gets your yellow letters down to .309 per piece, standard mail. (not first class)  Leads in bulk .09 to .15 per lead.  Used decent envelope printer, $7,500 (lease for $250 per month for 39 months).  Envelopes, paper, ink, etc.

I planned on 6000 pieces per month.  I just completed sending 500 of the first 3000 and it took me forever.  I bought the wrong printer first $400 down the drain.  Then I bought another "cheap" $400 printer and although it was fast (70 pages per minute), the envelope feeder only held 8 envelopes at a time.  Try doing a 3000 piece mailer feeding envelopes 7 at a time.  You really need that $10,000 + specialty envelope printer if you plan on doing them in bulk.

Stuffing envelopes - I timed it.  I fold the letter, stuff it and place the precancelled stamp on it at a rate of 94 envelopes per hour.....takes forever.

Add in screw ups (see my post about 3000 yellow letters down the drain) and you have yourself a time consuming, repetitive, completely boring endeavor.

If you plan on sending a few hundred a month you can swing it on your own but if your time is worth anything you'll outsource.  Once I get these first 3000 out the door I will be outsourcing to  I really tried.  I read everything I could.  I created my own handwriting fonts, bought special printers, etc.  it really is a major pain in the least that's my experience.  I couldn't justify the extra cost by outsourcing until I tried a large mailing myself.  It's just not worth trying to do on your own in my least not at my volume.  If I was going to send 15,000 pieces per month forever and shelled out 30-40k in equipment, then it might be worthwhile.  It's painful man.  I just spent 2 days stuffing envelopes and I didn't even make a dent in my pile of letters.

Ouch! Yeah, I needed that... If you would've gone with YellowLetters as opposed to doing it yourself with all the costs included (paper, ink, printer, envelopes, postage,) how much do you estimate the difference in cost would've been for 3000 letters? @Phil B.  

I'm at .481 per letter just for the printing and postage doing it myself.  Add .13 per address for the lead.  Outsourcing the 3000 would cost me .277 more per piece but that doesn't take into account my time, wear and tear on my equipment, 3 trips to the post office, making a total mess of my office, etc.

Put another way, knowing I can only do about 40 per hour tops times the .277 per piece I save by doing it myself, comes out to $11.08 an hour.  My time is worth a lot more than that.

I will add that Michael Q at stepped in and printed all 3000 for me for free after I screwed up the entire first batch doing it on my own.  If he didn't, it would have cost me a lot more and twice the time.

Here's a better question to ask yourself:  What business are you in?

If you're in the real estate investment business and must watch every penny, irrespective of your time, then by all means, do what you think will keep your expenses to a minimum.

If, on the other hand, you are really in the business of creating profit by way of being a good marketer and a committed dealmaker, your creative energies ought to be reserved for doing what you do best (or intend to do best)... Do deals.

There is more expense than paper, postage and labor. It's called opportunity cost. For example, the cost of not doing a deal that you missed because you were stuffing envelopes or supervising the stuffer. 

Need I say more?

I agree with Rick. If you want to generate revenue, you have to learn to be more effective. You want to delegate all the mundane tasks to others and focus on doing tasks that only you can do.

While you are calculating the costs of all the raw materials, you also have to calculate your salary into the total cost of writing your own handwritten letters. Add to that the opportunity cost of doing it yourself. 

Grishma Govani
List of best real estate marketing tools from RE/MAX R4 convention

Omari if I was you it would be a easy decission to do it in house. For one it helps you get that hands on training you need on how this real estate marketing things works. 

600 to 700 pieces  should bring back some buzz. But I'm one of those marketers in real estate that even though people might not convert in selling their house. I still want to get them to come over to website and get on a list, so I can educate them on certain housing and real estate issues. By doing it in this manner you still are getting people who are interested but just not today. So as time goes on when they are ready to sell who do you think their going to call?

Yo will your letter be worded toward the homes owners?

Antonio Coleman "Signing Off"

@Omari Brown   I am going to go with the minority vote here. Do it in-house. Don't try to go big yet. Do 100-200 per week for short while, and do them on a 4 week cycle. Will it be a painful experience? Probably. But there are lessons to learn while growing. Most importantly you can refine your phone technique at a low cost. Then after a few months, you will appreciate the expense of outsourcing, and the benefits. And you will be ready to profit from it more fully. Outsourcing is by far the best path overall, but the lessons learned should cost you less if you start in-house.

I would out source. Getting started is a little more but at the moment I am down to .41 per a letter and I don't have to worry about falling behind on all my other work. Way too much stress to do it yourself and there are a lot of hidden costs. I use realty postcard. Some companies offer discounts on certain products or bulk orders, so it really helps to look around.

We bought enough equipment to do 500-1000 letters per week but recently decided to start outsourcing again. If you decide to do it in-house you'll probably want the following...

-Paper folding machine, this will save you a ton of time. We can fold 500 letters in about 10 minutes. 

-Laser printer that is compatible with an envelope feeder. Again, the feeder saves a lot of time so you aren't constantly reinserting envelopes to your printer. 

-Buy self sticking envelopes

Doing them ourselves save us about $.20 per letter. We recouped our small investment in printing equipment back very quickly. It's just not something we want to fool with anymore though. 

Thanks all for your feedback! At this point I'm thinking its a better option to outsource. I am very conscious about spending my 24 hours per day as productive as possible. With that being said, I've got a lot less on mind if I just outsource it and a lot more time to spend perfecting my craft and developing other marketing strategies. The way I see it, it would make more sense to do it in house once I've got a little more money to spend on equipment and the ability to mail to a lot more addresses without missing a ton of calls from motivated sellers.

Account Closed Thats low compared to some of the big name services! What kind of letters are you using? And what do you define as "bulk?"

Mailing a few thousand or fewer pieces of mail or less per month, you won't have the statistical significance to test and understand what is working vs. what isn't.

Unless you are doing a serious amount of volume , both from a cost and performance aspect, it will make more sense to outsource.

I just started my direct mail campaign and it took a whole Sunday (3:30-9PM) to do 200 letters and this was about as automatic as the average Joe could get:

  • Printed Yellow letters using Officejet printer (Paper from Amazon)
  • Printed envelopes using the same printer (Envelopes from Dollar Store)
  • Bought 400 forever stamps from the Post Office to create the "genuine" effect

Still, folding and stuffing papers was an extremely underestimated variable. Three beers and six hours of folding can not be my life if I want to get to my ideal volume which would be around 1-2k per month once I'm able to afford the list and the postage. 

@John D.  I'm intrigued by your statement. How many mail pieces do you feel is required for a good statistical sample.

Account Closed What kind of equipment did you use in your setup?

@Omari Brown  

This isn't a direct answer to your question but more of my experience/view of it in my business.  

I did direct mail myself for a pool company that I started when I was 19 so when I started trying to generate real estate leads I thought I should just do it myself.   You can go over cost vs time all you want but at the end of the day, for me anyways... doing the stamp licking, printing cutting etc... just sucked big time and I'd be a very happy man if I never did it again. 

Like has been already said, if you need to save the cash when starting out, it's not a bad thing to suffer a little for a good cause. 

I'm doing all the mass mailing mundane works for the time being. I found out that the source list (database) has several missing names, addresses and other infos. Since I'm doing this myself I did able to correct/complete them. How are we be sure these glitches are taken care of if we outsource them? How do we know the mailing are done completely?

@Phil B.

Regarding precanceled stamps, how does the post office want your letters sorted? By zip code only or zip code + 4 digits?

Also, the mail piece minimum requirement of 500, 3,000 & 10,000; if I were to send 500, does this mean all 500 mail pieces have to have the same zip code, or can I have those 500 letters going to different zip codes? 

If you are really planning growth to scale then mail in house. The reason to do so is not necessarily to reduce cost but to be efficient. If some bad news hits a city (crime, company shutting down) we can have mail to them the next day, with the mail piece being relevant to that news story. 

It's quite an investment. We're buying a $93k printer to get more mail out the door, and this is nothing compared to the printers the big mail houses use. 

Do it in house. Get a full service mailing permit with USPS and the permit fee is waived. My standard mailing cost of postage averages between 0.23-.24 cents per piece. My total cost with ink, paper, envelope, postage, stuffer labor (pay my stuffer $12/hour) comes out to around 0.35-0.40 cents per piece. 

Invest in a good printer and folding machine. You startup cost of printer, folding machine, paper, and envelopes if you're doing under 5,000 envelopes per month should come out to around $1,000. You will recoup this cost quickly. As you grow bigger you will build systems that will eventually save you quite a bit of cash. 

If you get up to 30,000 envelopes per month and do it in house for an average cost of 37.5 cents versus outsourcing it for 61cents ( price) you'll be saving over $7,000 per month. Just systemize the task so you have minimal time invested but ability to get your mailing done at the cheapest rate.

Side Notes:

Your stuffer should be able to stuff around 200-250 per hour with a folding machine

If your using an ink jet than train your envelope stuffer to refill the ink instead of buying genuine cartridges. (example my printers cartridges are $550 for a complete set but ink costs $30 and refilling takes 30 minutes. $520 saved in 30 minutes)

Hi April I use the HP Pagewide 477dw it can print out all the letters very quickly but it is a ink jet printer so ink can be expensive unless you refill it yourself like I do. I buy ink from this company called  INKUTEN and just refill them myself saving quite a bit of money in the process

Originally posted by @April Molina :

@Mark Ortega Hey Mark, 

What printer brand do you use?

Mark Ortega what stuffing machine do you recommend? Are you printing standard envelopes #10 etc or do you print any heavier weight or custom size envelopes?

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