Comment by vaksel | Hacker News Reader

Comment by vaksel | Hacker News Reader

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the problem with this is scale.

Just look at what you need to do: print out the letter, print out the envelope, stuff the letter, apply stamp, seal the envelope. Double check the data.

That's 3-5 minutes per letter.

   @3 minutes that's 20 letters per hour. 
   @4 minutes that's 15 letters per hour,
   @5 minutes that's 12 letters per hour.

So your potential income is $12-20 an hour.

Let's add up all your variable costs: stamp: 44 cents ink: 22 cents (sample laser cartridge is $35 for 470 pages, count 3 to print envelope+2 pages)

So based on this, you are making 33 cents off each letter. That means your current profit margin per hour is:

   @3 minutes: $6.66 per hour
   @4 minutes: $4.95 per hour
   @5 minutes: $3.96 per hour

At those rates, you can't even legally hire anyone, since the minimum wage is $7.25 per hour.

Even if you get super efficient and cut that down to 1 letter every 2 minutes. (simply can't do it faster than that on consistent basis), that's only 30 letters mailed. Or $9.90 an hour.

At $1 a letter you simply aren't making enough money. You need to pretty much double your rates, to make this workable.

Perhaps it's time to invest in an automatic letter folder? http://techkousa.com/letterfolders/

Perhaps a postage meter that prints postage on the envelope? http://www.pitneyworks.com/postagemeters/

Who's going to step up to hack a letter folder so it inserts the letter in an envelope?

With $40k of automation, I bet you could hit 20 letters per minute. You'd make your investment back in just a few short decades!

That's 3-5 minutes per letter.

That's 0 seconds per letter, if you're calling out to an existing API, which would be the only way I'd even consider getting into this business. You just take the difference between your marked up rates and the underlying service provider's bulk rates.

Any defensible value in this service is in the marketing/app design, after all. Printing, stuffing envelopes, and dropping them in a bin is always going to be a commodity service.

At scale, all of these things can be automated. The challenge is getting to scale but not getting destroyed by someone who already has the infrastructure to do this at far lower cost. (Vistaprint, for example, could probably offer this service with just a little bit of programming work.)

To avoid that, you'll want to offer users whatever you can to make your service a more efficient option: address book integration, built-in letterhead, quickbooks integration, who knows.

You might also expand to adjacent markets. I once heard of an online greeting card company that lets you enter in the addresses and birthdays of everyone you want to send cards to. Then a couple weeks before each birthday, they mail you an envelope containing a pre-addressed, stamped envelope with your choice of card. You just write a note and drop it in the mail.

You could do the same sort of thing, maybe even including the handwritten part!

+1 for "At scale, all of these things can be automated."

I'm with you, it's tough to make the numbers work unless you've got some serious volume. You'll notice that one-off letters are actually $3 each.

You don't get the lower rates unless you commit to spending more... take a look at the pricing/signup link at the top. (Also, would love some feedback on this page...)

The idea of charging an up-front-buy-in is unusual, and I'm not sure why it makes any sense, except as an unusual way of helping you bootstrap this business.

What about replacing the Lite plan with something that costs $25/mo and includes 15 letters (add'l $2) and the Pro with, say, $99/mo for 99 letters (add'l $1.50).

Actually, I would rather setup a monthly plan instead... I got some initial pushback from my initial customers when they balked at the idea that they'd have to pay the monthly fee whether or not they actually mailed the allotted amount of letters each month. To be clear, the notion of "use it or lose it" seemed to scare people.

What you're proposing sounds a bit better (and helps me make more sense of the numbers), I'm going to put some thought into it this weekend.

Does anyone else have any thoughts on the pricing models?

EDIT: I've switched the plans over to monthly instead. Will monitor signups over the next few days and see how that compares to the pre-paid stuff I had originally.

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