Re: [AGA-sc] Foreign vs US Memberships

["Karen Randall" <krandall@rdrcpa.biz>]

All of our prices were based on the need to COVER our costs for TAG (and a 
little bit more for whatever else comes up).  It was never meant to be a 
"money maker".  The whole point of getting advertisers was to be able to 
make the leap to printing in color, without having to (at the time it 
seemed, exponentially) increase dues to cover the cost.  It is certianly 
nice to have the added income of advertisers, and I think that there are 
other benefits to have that kind of relationship with those companies.  But 
it sure sounds like TAG is more than paying for itself on all fronts at this 
point, due to your hard work finding inexpensive _AND_ reliable 
printers/processors/mailers.

There was never any intent to make over seas members pay more than "their 
share" of the costs of membership.  If circumstances have changed that, by 
all means let's pass that saving on to those members!

Karen

----- Original Message ----- 
From: "Cheryl Rogers" <cheryl@wilstream.com>
To: "AGA Board" <aga-sc@thekrib.com>
Sent: Thursday, May 25, 2006 4:25 PM
Subject: [AGA-sc] Foreign vs US Memberships


This is a long one. Go get a drink. I'll wait here.

Are you back? Okay.

I have been reviewing the shipping costs of TAG, and asking for more
itemized invoices from the mailers. I have concluded that foreign
members pay significantly more for postage and membership dues than US
members.

While at one time I’m sure that this was essential to ensure timely
delivery (or any delivery at all), we are now using a very reliable and
cost-effective international mailing company for TAG foreign mailing.
Therefore, I believe that the higher prices for foreign memberships and
even combos are no longer justified.

Keep reading to see how I got this notion and to check my figuring. Or
skip to the bottom for a recommendation.

Membership Comparison
(Note: To compare apples to apples, I am ignoring the Canadians and the
Mexicans. :-) No offense, Dorothy, but it just gets too hazy.)

The cost for printing TAG is $2.97 each, regardless of what country it
lands in.

Foreign TAG processing and shipping costs are invoiced by two different
companies. North Texas Mailing (NTM) puts the magazines into envelopes
and addresses them. Then they ship them to International Mail Express
(IMEX) in New Jersey, who distributes them to each country’s postal service.

Last time, AGA paid NTM $88.25 for 129 foreign pieces. IMEX charged
$182.39 postage. (Built into this is the cost of shipping the TAGs from
Texas to New Jersey.) So, postage and handling for the foreign TAGs was
$270.64, or about $2.10 each.

A foreign member pays $33 for a one-year membership, and costs the AGA
$20.27. AGA makes $12.73 per year.

NTM’s postage and handling fees for the US TAGs was $894.54 for 596
pieces, or $1.50 per piece.

A US member pays $20 for a one-year membership and costs the AGA $17.88.
We make $2.12 per year. That's SIX TIMES MORE profit on the foreign members.


New Member Combo Comparison
A New Member Combo consists of a one-year membership plus 3 TAG back
issues. The membership costs to the AGA are the same as above. However,
I will add Diana’s back issue sales costs and refigure the profits.

Diana sends the 3 magazines via Media Mail to US customers. It costs
$1.59. To send the same combo to, for example, the U.K., costs $5.25 via
Global Priority.

A foreign customer pays $48 for a New Member Combo. The postage is
$5.25, the envelope is free, and the TAGs cost the AGA $8.91. Plus the
cost of a foreign membership at $20.28. So the total cost to the AGA for
a foreign New Member Combo is $34.44. AGA is making $13.56 in profit.

In contrast, for a US New Member Combo, the customer’s price is $32. The
AGA’s cost is $1.59 for the postage, and let’s assume that the envelope
costs $.30, and $8.91 for the TAGs: our cost is $10.80. Plus the cost of
the US membership at $17.88. The total cost is $28.68, so the AGA makes
$3.32 per US New Member Combo. We are making FOUR TIMES MORE on the
foreign New Member Combos than the US ones.

And Now The 6 + 4 Combo
The 6+4 Combo is priced at $40. Diana asks foreign customers to pay $11
extra for postage. But Diana says that the 6+4 Combo rarely sells by
itself. Instead, most people who order the 6+4 Combo also order the New
Member Combo at the same time.

For overseas customers, Diana can send all 13 magazines for $10 via
Global Priority.

Ten more magazines costs the AGA $29.70 (I guess, because six of the
mags in the combo are PAMs, and I don't really know how much they cost).
Additional foreign postage is $4.75. So the additional cost to the AGA
is $34.45. Add in a foreign New Member Combo at $34.44, and you get a
total cost of $68.89.

The foreign customer pays $99 for a New Member Combo plus a 6+4 Combo
plus $11 extra in postage. The AGA makes $30.11 when we ship both combos.

Diana sends the 13 magazines to US customers via Media Mail for $2.55.
So the US version costs the AGA $31.26, assuming $0.30 extra for the
larger envelope, and $0.96 extra postage. Plus the cost of the US New
Member Combo at $28.68. Total cost to the AGA for both is $59.94.

The US customer pays $72 for both combos and the AGA makes $12.06. We
make MORE THAN TWICE as much on foreign customers.

Recommendations
1) lower the prices on the foreign memberships
2) lower prices on foreign New Member Combos
3) ask Diana to charge no extra postage UNLESS  a) the customer orders a
6+4 Combo or a book by itself, or  b) the package is going to a country
that does not accept Global Priority.
4) have Pete at NTM experiment once with non-profit postage to cut
costs, and therefore increase profits, on US memberships.

              OldPrice     NewPrice    Cost      OldProfit     NewProfit
For. 1-mem   $33          $27         $20.27    $12.73        $4.73
For. 2-mem   $63          $50         $40.54    $22.46        $9.46
For. 3-mem   $90          $75         $60.81    $29.19        $14.19

US  1-mem    $20          na          $17.88    $2.12         na
US  2-mem    $38          na          $35.76    $2.24         na
US  3-mem    $54          na          $53.64    $0.36         na

US-NMC       $32          na          $28.68    $3.32         na
For.-NMC     $48          $40         $34.44    $13.56        $5.56


If we do this we will decrease profits by about $800 per year in dues
and fees. But I am motivated by more than profits--I am also considering
fairness. The AGA is an *international,* not to mention non-profit,
organization. When our cost-cutting measures actually work, it behooves
us to pass the savings to our members.

And who knows, maybe we will attract more foreign members and customers.
Further, it has been more than a year since the last mailing glitch
(cross fingers and toes) and NT mailing has been timely and
professional. They have suggested the non-profit rate several times,
claiming that it does not usually take longer than first class. If we
could lower the cost of US memberships, it would offset at least some of
the loss.

Well. There it is. Whaddaya think?

Cheryl
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