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All this talk of rate cases and postal reform is a reminder that budgeting is just around the corner. To make that task easier,you should have a budget model ready so that you can input the data as soon as it is available. Another advantage is to be able to input new rates if necessary and even compare the old and the new.

In order to get started you will need your postage statements,production specs,trim size,basis weight,page count,circulation data and an estimate of advertising pages.

The calculations fall into three categories,the weight of the book,the circulation and the postage. In order to figure the weight of a book you will use a formula that converts basis weight into actual weight. Many of you have used the formula (l*w*pages*basis/950000) but did you know how it was derived? The basis number is the actual weight of a ream (500 sheets,which is 1000 pages) of paper that measures 25 inches x 38 inches. Using the formula you will input the page count for each different basis weight. You can see a suggested format on the model on the next page (PGS). You must also separate ad pages from edit and indicate the percentage,because that will be used in the postage calculation.

A good start for circulation figures is your postage statements. Naturally,since this is a budget,you will be using the projections that you get from the circulation department. Normally,the geographic distribution will remain the same and are prorated (see zones below),but its best to ask.

The most complex part of the postage calculation is shown below. The model creates "key" rates or weighted averages for your advertising rate based on copies in each zone and a piece rate based on your presort. The data comes from your 3541.

Periodical Postage Diagram 1

Periodical Postage Diagram 2Advertising (see chart to the right) uses the  advertising key rate ($0.3771 in this example) multiplied by the advertising percentage,the weight of the book and the copies. Since the Edit rate is a flat $0.193,no special formula is needed,its just the rate times weight times the editorial percent times copies. The piece rate is even simpler,just multiply the number of pieces (or you can use copies) by the key rate for piece postage.

This covers the first three components of postage in the model. The other calculations are for the editorial discount,discounts for DDU and SCF copies and pallet discounts. The edit discount is based on the total copies multiplied by the percent of editorial and the discount rate. DDU and SCF copies are already in your model since they are part of the zoned ad postage calculation but you will have to go back to the 3541 for the pallet copy counts and multiply by the rate.

Canadian and other foreign would be complex tables using USPS rates or very simple if you have a remailer with a flat rate.

If you drop ship be sure to add a line with the freight rate multiplied by the copies and the piece weight.

At the end of the form you will also see some useful analysis tools such as the "percent pound related" which will help when  asked questions that relate to changing weight (trim size and basis) or page count.

You can also have the ability to input different rates and compare results. In this model switching the "Y" to "N" would change to the proposed 5.4% increase.

This article was taken from the August 2005 Issue of the Media Logistics News by Matthew Morrone (  For information about custom budget models please contact Matthew Morrone.  Any periodical budgeting should be verified due to reform and pending changes in postal legislation. Forum Discussion ArticleJoin the Forum Discussion on Periodical Postage Issues – Click Here