Courtesy of Mailing Systems Technology Magazine (Abbreviated for length).
Introduction
The author of this article has created comparison charts that go over the changes to show how they will affect budgets. The reason that he does this is because when the USPS talks about a one to two percent increase, it’s important to remember this is overall.
Based on the type of mail you do, the increase could be higher or lower. You need to look at the class, weight, zone, density, and special services required to see the true impact. Also, when you look at the new rate charts provided by the USPS, they typically will not show the level of detail needed (the previous and new rates side by side, for example) to see these differences.
First-Class Mail Single piece - 1.1% Decrease to 9% Increase
The price of a stamp is going from $0.47 to $0.49, which is a 4.3% increase. The USPS did not increase the additional ounce rate so the percentage change gets smaller as items get larger. This is compared to metered letters, which will have a price reduction from $0.465 down to $0.46. This is the most significant savings ever offered in the US mailing industry because it means that by using a postage meter or PC postage, you will save $0.03 per piece, or 6.1%. This is an automatic savings for just using a system that costs as little as $20 per month to print postage.
Other interesting items in this category are the rates for flats, which went up to $0.98. It is believed this happened so retail customers could use two stamps to pay the full amount of postage.
First-Class Mail Commercial - 0.8% Decrease to 9% Increase
Rates stayed relatively flat in this category with slight changes based on sort levels. Mailers will see extra discounts at the five-digit category, and it may mean it is time to renegotiate rates with your presort service as they are getting a larger share of the savings.
The biggest change in this category is increasing the weight limit for the letter rates from two to 3.5 ounces. A few years back, the USPS initiated a plan where the second ounce rides free. The goal was to increase the value of the mail piece, allowing customers to add additional content at the same price. The USPS has now increased this limit from two to 3.5 ounces, which means that there is an incredible amount of material that can now be put into the envelope at no additional postage cost.
When you look at the chart above and compare the rates of a three-ounce metered letter at $0.88 to a commercial rate at $0.373, it is a 58% savings! This is going to be a big win for presort services that will now become more valuable because of the savings they can provide. Also for flats (9x12 or 10x13), consider folding those into 6x9 envelopes. The savings can be significant with these new rates and weight savings. A three-ounce flat at $1.40 now could cost only $0.373, assuming it could be automated through in-house software or presort services.
Marketing Mail (Formerly called Standard Mail) – 4.3% Decrease to 3% Increase
Customers who are sending Marketing Mail Letters will be happy to see a decrease in price while Flats are seeing small increases. Here are the other notable changes:
· The USPS has eliminated the three-digit sort level for letters, which will hopefully make preparation easier.
· Letter weight limit has increased from 3.3 to 3.5 ounces before per pound rates are required.
· Flats have also increased the weight break from 3.3 to four ounces prior to pound rates being calculated.
Conclusion
To budget for this increase, you need to look at the type of items you are sending and the weight and zones that are most common to truly estimate the impact. The good news is that for most mailers, this will be a very small impact to your budget with opportunities for savings if you can take advantage of some of the new discounts offered.
To budget for this increase, you need to look at the type of items you are sending and the weight and zones that are most common to truly estimate the impact. The good news is that for most mailers, this will be a very small impact to your budget with opportunities for savings if you can take advantage of some of the new discounts offered.
Adam Lewenberg, CMDSS, MDC, President of Postal Advocate Inc., runs the largest Mail Audit and Recovery firm in the United States and Canada. They manage the largest mail equipment fleet in the world and their mission is to help organizations with multi-locations reduce mail related expenses, recover lost postage funds, and simplify visibility and oversight. Since 2013, they have helped their clients save an average of 60% and over $26 million on equipment, fee and lost postage. He can be reached at 617.372.6853 or adam.lewenberg@postaladvocate.com.