Scaling a mailroom operation can be challenging, especially when a business grows rapidly. Traditionally, companies may choose to scale up by hiring more staff to handle increased mail volume, but this approach can significantly inflate costs. Instead, outsourcing the mailroom offers a more efficient and cost-effective way to scale. As volume increases, an outsourced digital mailroom can drive down the cost per piece, whereas scaling by adding internal staff often results in exponential cost growth.
Let’s explore why the price per piece decreases with higher volume in an outsourced digital mailroom, and how this contrasts with the cost implications of hiring more staff.
The Economics of an Outsourced Mailroom
An outsourced digital mailroom operates on a model that leverages economies of scale. In simple terms, the more mail that is processed, the lower the cost per piece. This efficiency comes from several factors:
- Efficient Utilization of Technology and Equipment
Outsourced digital mailroom providers already have the infrastructure, such as industrial-grade scanners, mail sorting systems, and document management software, to handle large volumes of mail. The cost of using this technology is spread across all clients, and the provider doesn’t need to buy new equipment just for your company, which means your expenses don’t balloon with your mail volume. - Staff Expertise and Automation
Experienced digital mailroom providers employ automation software and workflows to manage high volumes without a proportional increase in labor costs. These automated processes reduce the time spent on manual tasks, allowing more mail to be processed at a lower cost per piece. When volume increases, they can adjust workflows and optimize staff allocation to maintain cost efficiency. - Shared Overhead Costs
When you outsource your mailroom, the fixed costs, such as office space, equipment maintenance, and technology upgrades, are shared across multiple clients. As your mail volume grows, these costs are spread over a larger number of pieces, resulting in a lower cost per unit for you.
The True Cost of Scaling In-House: Why Adding Staff Isn’t Always the Answer
Conversely, scaling up a traditional, in-house mailroom operation often results in disproportionate cost increases. Let’s break down why adding more employees to handle increased mail volume can quickly become expensive:
- Labor Costs Multiply with Each New Hire
Each additional employee brings significant overhead costs—salaries, benefits, training, and workspace. For every new staff member, the total cost of running the mailroom essentially doubles (or close to it), as their salaries and associated expenses compound. Unlike an outsourced model where existing processes absorb increased volume, adding staff incurs additional fixed costs each time you scale up. - Diminishing Returns on Productivity
As the in-house team grows, managing workflows and keeping operations running efficiently becomes more complex. More staff can lead to coordination challenges, requiring additional management oversight. These diminishing returns in productivity can increase the cost per piece processed, rather than decreasing it. - Investment in Additional Equipment and Space
Scaling in-house mailrooms may require additional office space, equipment, and technology, all of which entail considerable upfront and ongoing costs. Unlike an outsourced provider that can optimize existing resources across multiple clients, an in-house operation must bear the full burden of these investments.
How an Outsourced Mailroom Can Scale Smoothly
With an outsourced digital mailroom, businesses can handle larger volumes without a corresponding spike in costs. Here’s how outsourcing helps keep scaling efficient:
- Scalability Without Disruption
Outsourcing provides the flexibility to scale up or down based on fluctuating mail volumes, without needing to hire or lay off staff. Digital mailroom providers can adjust their processes, resources, and staffing levels to accommodate changes in volume without interrupting service. - Access to the Latest Technology and Expertise
Outsourced digital mailrooms stay at the forefront of technology and best practices in the industry. Their investment in state-of-the-art equipment and highly trained staff allows them to manage large volumes more efficiently than a traditional in-house team ever could. As your volume grows, you benefit from these efficiencies without the financial burden of investing in new technology or training staff.
Real-World Example: How Volume-Based Pricing Drives Cost Savings
Imagine a company that processes 10,000 pieces of mail per month in-house. To manage an increase to 20,000 pieces, it might need to double its workforce, which would double its labor costs. Additionally, they may need to buy or lease extra equipment and expand the workspace.
In contrast, if that same company outsourced its mailroom, the digital mailroom provider could absorb the increased volume using existing infrastructure. The provider could offer a lower price per piece due to economies of scale, allowing the company to achieve significant cost savings compared to the in-house scaling approach.
Key Takeaways: The Cost Benefits of an Outsourced Mailroom
- Avoidance of Labor Multiplication: Unlike in-house operations that double costs by adding staff, outsourced mailrooms can scale efficiently without significant cost increases.
- Access to Advanced Technology and Expertise: Outsourced mailrooms use automation and industry best practices to keep costs down, even as volume grows.
- Flexible Pricing Models: Pricing that adapts to volume changes helps maintain cost efficiency.
Conclusion
Choosing an outsourced mailroom over scaling an in-house operation provides a clear cost advantage. By capitalizing on economies of scale, shared resources, and technology investments, outsourced digital mailrooms allow companies to scale without significant increases in cost, providing a sustainable and efficient solution for growing businesses.