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At the time of writing, a quick glance at the prices on the Royal Mail website shows that sending franked mail can save you 20-30% on the price of stamps. This would suggest that there are large savings to be made when you use a franking machine for your business mail. However, the franking machine market is full of additional, incidental and sometimes hidden costs which can quickly eat up all those savings.
Here we attempt to cut through the confusion and provide a definitive guide to identifying franking machine costs in order to find the best solution for your business.
Broadly speaking franking machine costs break down into main categories: the cost of the machine itself; cost of crediting and updating the machine; cost of maintenance and service; cost of consumables. We will attempt to deal with them separately.
The Cost of the Hardware
Franking machines come in a variety of sizes and with numerous extra features to cope with any kind of business mailing requirements. They are available to rent, lease or purchase. Purchasing a franking machine will obviously result in the acquisition of a fixed asset but will not necessarily remove the need for additional outlays later (we’ll get to the extra costs soon). Renting or leasing a machine means that some of the extra costs can be rolled into an ongoing monthly or quarterly charge so you don’t get hit with unexpected outlays.
A very basic machine for small or home office use requires the manual inputting of postal charges for each item of mail franked. They can be purchased for around £1,000. To lease will cost upwards of £5 per week, depending on the length of the contract (as you’d expect, longer contracts lead to lower weekly prices).
A medium usage machine will normally incorporate scales which automatically tell the machine how much postage to apply and may also include such features as a facility for printing logos or advertising messages, separate cost centres for monitoring postage spend across the company and auto-feeders for franking batches of identical envelopes. The purchase prices for these machines start at £2,000 or so and they can be leased for £15 per week and upwards.
High volume machines include features for companies who send lots of mail and whose mail requirements are integral to the business. They automate more aspects of the mail procedure including folding, stuffing and sealing envelopes. Prices for these machines can range as high as £25,000 and lease prices approach £200 per week.
Credits and Updates
Franking machines need to be ‘topped up’ with Royal Mail credit in order to apply franking to mail. But rather than dealing with Royal Mail directly as a user you make these transactions through your franking machine provider as they supply the necessary system. They will either require payment in advance or can bill you for top ups made during each month/quarter in arrears.
This makes the process simpler than having to deal with several parties but be aware that some suppliers will charge you making refills or impose penalty charges for making more than your contractually agreed number of top ups in a given period.
Another potential source of charges arises from updates to the Royal Mail pricing structure. These changes need to be downloaded by your machine. This is also a service that your franking machine supplier will provide and potentially charge you for.
Both credit refill charges and pricing/software update charges can be rolled into a lease agreement so that you always know exactly how much your paying and don’t have to worry about incurring extra charges. These schemes vary between suppliers and need to be considered. Some machines also have ‘smart meters’ which automatically search for and download updates but these are more expensive.
A pricing update charge can be as much as £150 and a refill charge £5-10.
Franking Machine Maintenance and Service
Franking machines are, in general, pretty low maintenance pieces of hardware. Lease agreements will usually include at least one year of free maintenance cover.
Service agreements can range from £30 for a very small machine up to £2,000 per annum for a very large machine. A typical medium sized business can expect to pay £300 - £400 per year for this but this will normally include the kind of updates mentioned above and requisite inspections by a Royal Mail approved inspector.
Franking Machine Consumables
Again, lease agreements or service plans will sometimes also include consumables, cleaning etc. But if you purchase a machine, or opt out of the service plans you could be looking at spending £80 per cartridge of standard red ink and about £30 for a cleaning kit.
It is plain from the above that opting to purchase your franking machine from the supplier, while reducing the long term cost of the hardware, will leave you open to a number of additional charges. It’s worth thinking carefully about whether leasing with all these charges rolled in is a better option. You should also gather quotes from several suppliers and ask them to make explicit all the additional costs for credits, updates, maintenance, inspections and consumables. Only then can you be sure you’re maximising the available monetary savings from franking and really enjoy the labour and administrative savings as well.
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