I have created a magazine overhead cost calculator for newsagents to use to easily calculate your cost per magazine pocket.
Enter four data points in the the unshaded cells and the calculator will reveal the monthly and weekly cost per magazine pocket in your newsagency.
I have settled on four three data points as a result of decades of work with newsagents on this issue. The three data points are:
- Your total lease cost including rent, outgoings, any landlord marketing levy – all costs associated with your retail space.
- Percentage of floorspace allocated to magazines.
- Your number of magazine pockets – include all pockets. For example a waterfall of six pockets for a title counts as six and not one.
- Your labour cost managing magazines: arrivals, returns, magazine specific management – plus time and or fright costs on returns. It is essential you include a market price cost for your time.
The purpose of the calculator is to make you informed for when you consider changes in your business. With rent increasing 5% annually and labour increasing between 2% and 4% annually and your magazine gross profit return in decline, as it is in most newsagencies, managing space is the best option you have to manage your situation.
My advice is get accurate figures into your calculator so you know your weekly and monthly cost. Next, start to look at titles. For example, a monthly magazine selling two copies a month and generating $3.975 in gross profit is loss making in the example I have used. The calculation does not factor in opportunity cost – the value of the best alternative use the space.
This calculator is particularly useful in assessing the value of long on-sale titles that are usually pushed to newsagencies with delayed billing.
To any publishers who say I am writing about this to turn newsagents against magazines I say the facts of the data speak for themselves. My goal here is for newsagents to be informed. Being informed is critical to any business person to make decisions appropriate to their business.
Completing the spreadsheet and assessing pocket allocation can help newsagents alter how the display magazines. For example, in my own case, I have several sections where I place six titles where previously there were two – thereby reducing the overheads associated with the titles while not reducing the range I carry. Indeed, this decision is the one I expect most newsagents would make on first go round with the spreadsheet.
Another use of the spreadsheet is to inform publishers of the overheads associated with magazines in our retail network. If could be that a stocking contribution is all that is needed for us to carry some titles that otherwise me might cut as a result of this analysis.
My understanding is that some magazine publishers pay stocking contributions or some similar pocket based fee to some other retailers – giving them a competitive advantage over our channel.
I’d be happy to talk and or work with any newsagent using the spreadsheet.
This spreadsheet is something practical the ANF could have done for newsagents. Instead, they took the lazy approach and agreed with the publishers to a supply trial that has not considered available data to better understand the current situation.
In the sample you can see the costs as calculated for one of my newsagencies.
The newsagent who sent me this evidence of oversupply of Wheels magazine must be wondering if this is payback for some offence as there is no logic behind Bauer Media’s decision to double supply of Wheels magazine. There is no evidence in the data either. Look at April, Bauer bumped supply from 4 to 8 even though at 4 they were not selling out. The newsagent feels helpless. They also feel their work in ensuring accurate sales data is wasted.
