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Your attachment comes up as a blank screen when I tried to preview it, but I have some ideas anyway.
If you just create a generic label layout (don't worry about getting the measurements right in the label wizard) and then go into layout mode you will see some stuff similar to this image, with dotted lines between horizontal label areas.
You can drag the dotted line along the right edge of the FIRST label to make all labels on the page wider or narrower, as well as lengthening or shortening the body part of the layout, giving you any size you might desire.
You can also go into the Layout Setup screen to redefine how many to print across if your default label wasn't correct, and to adjust the left and right print margins for the actual label sheet in the layout setup dialog. Then readjust the width of the left-most label area on the layout itself.
I have almost never been happy with the New Layout wizard's results when designing labels, even for some of the most basic Avery varieties, so I do this all the time.
I define the top, left, and right margins for printing, but I usually make the bottom margin shorter than the sheet would suggest (sometimes even 0) in case the label body ends up being a pixel longer than expected so it doesn't leave the last row of labels blank when printed.
Thanks, Stephen. I now see that I can use the dotted lines to control the "pitch" between labels, and the text box to control the size of the label. Now some trial and error is in order, and I will try your suggestions for the margins. If I need some more help tweaking it I will get back to you. Great help!