If you are interested in sending out direct mail, bulk mail is the only way to keep costs down. In the past, we used letter houses to do the addressing, but in recent years, we just went ahead an bought a bulk mail permit in our local town. The challenge was then how to generate the rather complicated mailing paperwork for the USPS, as well as the intelligent barcodes. We purchased high speed addressing equipment and Satori bulk mailer software.
But, in the past year, we have learned of an alternative. Lorton Data. This company will allow you to buy subscription units (essentially a pre-purchase of services). For example, you can buy a 100,000 credits which can then be applied against any of their services. This can include running a list against the USPS move database or pre-sorting the list and generating the mailing paperwork.
If you are running more than 250,000 pieces/year, then it probably makes sense to buy software. But the software isn't cheap and it can have limitations. For example, the annual renewal on Satori's software is $1000, but that's for the basic version. With the basic version, you can only have a list of 5,000 addresses. If you have a list of 10,000 addresses, you have to break it into two pieces, generate two lists, two sets of paperwork, and deal with two transactions at the post office. If you're only mailing 20 lists of 5,000 names, then it's not so much hassle, but it's costing about 1 cent per address.
Lorton has an online service that allows you to do the same things as Satori (or other) mailing software, and, if you are running less than 250,000 pieces, it will probably come out to the same cost or less. If you are sending only 50,000 pieces, you'll come out considerably ahead on a per-address cost. Plus, the units you buy are good for 2 years. Plus, you can have them generate PDF files which you can then print on pre-cut labels, so you don't even need a high speed addressing system. (However, you will have to hand affix the labels - not so hard if you're doing 250, but a hassle if you're sending 5,000.)
Anyway, our team may be moving its entire mailing operation over to Lorton. We've tested their output with our high speed printers, and we can export the lists to Microsoft Word and then print them to the printers. This should work just fine.
Good luck with your mailing!