Re: [AGA-sc] Foreign vs US Memberships

["S. Hieber" <shieber@yahoo.com>]

Wel that's the kind of cracker jack financial analysis we pay that darn 
treasurer for. I haven't run the numbers, only looked them over quickly but 
they look good and I subject to a more thorough run through, which I plan to do 
tomorrow, I agre with the recommendations. Lowering the price is as likely to 
bring more foreign members than merely decrease revenues from the ones we would 
have otherwise. So I expect some mitigation on the foregone revenues. Plus 
there is a fairness issue. And anyway, we are finanically healthy enough to 
give it a try, just onthe chance that lowering price might yield a net 
breakeven or even increase in revenues. I always thought it was a testament to 
the foreign members and the quality of TAG that they paid such high prices :-)
 
Btw, we still might break $50K this year. Technically, we are sitting at $50.8k 
right now, but much of that will go back out the door for convention expenses.
 
sh
 

----- Original Message ----
From: Cheryl Rogers <cheryl@wilstream.com>
To: AGA Board <aga-sc@thekrib.com>
Sent: Thursday, May 25, 2006 4:25:59 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 Iâm 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 countryâs 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.

NTMâs 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 Dianaâs 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 customerâs price is $32. The 
AGAâs cost is $1.59 for the postage, and letâs 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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