What does this mean to your business? Our feature article can help to answer these questions and more…
The Big Picture
One way to approach the changes in postage rates is to look at the rates from two distinct types of mail services:
Shipping Services — Including Express Mail, Priority Mail, Parcel Select, Parcel Return Service, and International Mail.
For the first time USPS pricing includes commercial volume and contract prices, rebates, online price reductions, and other new incentives.
These changes are designed to make the USPS more competitive with other small parcel shippers and provide an opportunity to reduce the costs of small parcel shipping through the use of volume discounts and rebates.
Pricing Highlights:
Mailing Services — First-Class Mail, Standard Mail, Periodicals, Package Services, and Special Services.
The average increase by class of mail is at or below the rate of inflation as measured by the Consumer Price Index. First Class stamps will increase to 42¢ the “Forever Stamp” introduced last May will continue to cost 41¢ until May 12 and can continue to be used after the increase date. Don’t worry about a shortage of these stamps, the USPS has over 5 billion in stock.
Pricing Highlights:
More Details – Provided by the USPS
Another way to examine the change is by further segmenting Domestic and International services.
Domestic Mail Services
The additional-ounce price for all flats and packages remains 17 cents, and the additional-ounce price for automation-rate letters remains 12.5 cents. We have reduced the additional-ounce price for presort-rate (nonautomation) letters to 12.5 cents (the same as for automation-rate letters). This eliminates extra mail preparation work by customers, simplifies the postage verification procedures, and results in some relatively large price reductions for presort-rate letters weighing 2 to 3.5 ounces. We maintain the 2.2 cents difference between 5- and 3-digit automation-rate letter prices, and provide slight reductions in the prices for 5- and 3-digit automation-rate flats. The nonmachinable surcharge for single-piece and presort-rate letters increases to 20 cents, and still applies to all retail and nonautomation presort letters regardless of weight.
Standard Mail
The price changes for letters and flats reflect our decision to moderate the increases for catalogs and other flats due to the large price increases of last year. We have reduced the pound price for flats to provide some additional relief for catalogs. In some instances, more highly presorted catalogs weighing more than 3.3 ounces will see modest price reductions. This reduction also encourages catalog mailers to add content to their catalogs.
Standard Mail parcels and Not Flat-Machinables meanwhile, have larger price increases. This reflects the higher costs of processing parcels as compared to letters and flats. The new prices move toward providing parcels with better cost coverage and encourage efficient drop-ship behavior by increasing the incentive to take parcels to the destination delivery unit.
With the advent of delivery point sequencing of letters, and with the expected implementation of the Flats Sequencing System (FSS), the relationship between high density and saturation Enhanced Carrier Route and basic Enhanced Carrier route preparation will remain important. There are modest increases for walk-sequence saturation and high density Enhanced Carrier Route Standard Mail items.
Domestic Package Services
Overall, there are modest increases and price reductions in certain prices of Inter-BMC/ASF Parcel Post. We have reduced the nonmachinable surcharges for both Intra- and Inter-BMC/ASF parcels.
Bound Printed Matter (BPM) has two shape categories: flats and parcels. The percentage increase for BPM is lower for flats than parcels to encourage more flat-shaped catalogs.
In a change separate from the Mailing Services pricing change, but also effective May 12, all BPM, regardless of quantity or pricing claimed can only be prepared and mailed as a permit imprint mailing entered through a business mail entry unit. Retail outlets will no longer have BPM pricing information in POS terminals. Therefore, BPM can no longer be mailed at retail outlets, placed in collection boxes, or given to a carrier. If the material being mailed is eligible, Library Mail and Media Mail postage is still available at retail outlets.
Library Mail and Media Mail have prices that are linked by law and thus, have low cost coverages. We have increased the prices by 4.5 percent.
Special Services and Other Fees
Certified Mail® increases by 5 cents, and electronic Return Receipt increases 15 cents. There are no changes to any of the Delivery Confirmation™ service fees, including the no-fee option included in the price for certain Priority Mail® and Parcel Select® parcels. The first two notices for One Code ACS™ for First-Class Mail letters remains no-fee. One Code ACS “additional notices” for First-Class Mail letters and the first two notices for Standard Mail letters increase by 1 cent. There are no price changes to the other manual and electronic fees, to encourage better addresses. For Confirm® service, the new prices retain the existing unlimited scan option, though the Platinum Tier receives a larger increase to reflect the changing subscriber base.
There are minimal increases to Post Office™ box and Caller Service fees, and all Post Office boxes and Caller Services maintain their current fee group. Up-to-date fee group information on Post Office boxes is available on webBATS, as well as in Publication 431, Post Office Box Fee Groups. New fees apply only to new rentals and renewals. Current Post Office box holders (and customers paying Caller Service fees) are not required to pay the new fees until their current rental period expires and it is time to renew. Post Office box and Caller Service fees may be paid for up to two semi-annual periods at a time (i.e., up to 1 year in advance).
Annual mailing and permit fees increase to $180, and all annual account maintenance fees will be $565. The quarterly fee for high-volume qualified business reply mail letters increases to $1,855. Remember, new fees apply only to first-time payments and renewals. Customers with current fees paid will pay the new fees at renewal.
International extra services fees maintain their correlation for those services that are similar to domestic special services.
Express Mail
With the exception of the flat-rate envelope, Express Mail service is no longer priced based on weight alone. Instead, Express Mail service will offer zone-based prices based on weight and distance consistent with standard industry practices. On average, Express Mail prices will increase 3 percent with larger increases for heavier pieces and pieces destined for Zones 5 through 8 (mail transported more than 600 miles).
We introduce Express Mail “commercial base” prices 3 percent lower than retail prices. Commercial base prices will be available to customers who use an Express Mail Corporate Account (EMCA) — including Federal Agency Accounts — and Click-N-Ship® customers, as well as customers who are registered end users of PC Postage® service (e.g., Stamps.com, Endicia, and Pitney Bowes) and produce individual shipping labels.
Commercial base price reductions apply to postage only, and not extra services such as additional insurance and pickup on demand service.
To encourage growth, beginning July 1, 2008, commercial volume rebates will also be available (in addition to the commercial base price) to customers whose account volume exceeds a minimum threshold.
Rebates will be credited to each qualifying mail owner’s account each postal quarter. Rebates are intended for end users; therefore, third-party consolidators and postage resellers are not eligible. We will be working with other vendors to expand the availability as we authorize additional systems.
The new Express Mail Flat-Rate Envelope retail price is $16.50, and the commercial base price will be $16. We are eliminating separate price schedules for “Post Office-to-Post Office” and “Custom Designed,” and Post Office-to-Post Office service will be replaced with a “Hold for Pickup” option. We will continue to notify addressees of the first delivery attempt of an Express Mail piece, and we will provide a second notice on the third day. We will no longer make a second delivery attempt unless requested by the customer.
Priority Mail
Priority Mail retail prices are increasing by 6 percent, on average, with individual prices increasing from 0 to 10 percent. The price increases tend to be larger for relatively heavy pieces and for pieces that are transported relatively long distances.
Priority Mail commercial base prices will be 1 to 11 percent lower than retail prices and 2.2 percent on average lower than today’s Priority Mail prices.
Commercial base prices will be available to customers who use Click-N-Ship service, customers who are registered end users of PC Postage service and produce individual shipping labels, and customers using permit imprint with electronic Confirmation Services. A routing barcode will be required by October 1, 2008. Commercial base price reductions apply to postage only, and not extra services such as insurance and pickup on demand service.
Parcel Select
Parcel Select is the Postal Service’s bulk ground shipping product primarily for destination entry (i.e., Parcel Select–Destination Delivery Unit (DDU), Parcel Select–Destination Sectional Center Facility (DSCF), and Parcel Select–Destination Bulk Mail Center (DBMC). It will now also include Inter-BMC parcels prepared and mailed at Origin BMC (OBMC) Presort, BMC Presort, as well as machinable parcels prepared for barcoded discounts. On average, Parcel Select prices are increasing by 5.7 percent, and priced to encourage Parcel Select shippers to enter parcels at DDUs.
To encourage growth and continued use of Parcel Select service, we will offer loyalty and growth incentives to large-volume shippers. These annual rebates will be available to shippers whose total annual Parcel Select postage is at least $5 million and whose Parcel Select volume increases over their total volume for the previous year. These shippers will receive rebates based on all DDU volumes. Customers whose Parcel Select volume grows by more than 10 percent will be eligible for an additional rebate applied only to qualified incremental DDU volume.
Parcel Return Service
Parcel Return Service (PRS) is the Postal Service’s bulk parcel return product. Parcel returns are made to select return delivery units (RDUs) or any return bulk mail center (RBMC). The overall average price increase is 2.2 percent; however, the new structure prices RDU parcels by 1–70 pounds and an oversized price allowing for a decrease to lighter-weight parcels (RDU prices are not subject to balloon-rate criteria). RBMC prices will continue to be based on weight and zone (and the balloon-rate criteria).
International Mail
In May 2007, we completed a major restructuring of our international services by streamlining the international mail offerings and more closely aligning each international service with its domestic counterpart. At this time, only a limited number of structural changes to the international product line in addition to the price changes are necessary. Except for First-Class Mail International items, all other international products are shipping services products.
International Mailing Services
First-Class Mail International
Shaped-based pricing is introduced with separate prices for letters, large envelopes (flats), and packages (small packets). This change aligns this price structure with that for (domestic) First-Class Mail service implemented May 2007. The weight limit for letters will be 3.5 ounces, and the weight limit for large envelopes and packages is 64 ounces. The nonmachinable surcharge will now apply to all nonmachinable letters regardless of weight (the same as domestic First-Class Mail letters). The total number of country price groups is expanded to nine — aligning the First-Class Mail International price groups with Priority Mail International™ and Express Mail International® services. The size standards for First-Class Mail International letters and large envelopes have changed. See page 20 of this Postal Bulletin issue, page 31 of Notice 123, Price List, and Mailing Standards of the United States Postal Service, International Mail Manual (IMM®) 240.
As with (domestic) First-Class Mail, we will have separate First-Class Mail International price categories for each mail shape: postcards, letters, flats (large envelopes), and packages (small packets). Unlike domestic First-Class Mail service, however, the price for postcards and 1-ounce letters continue to be priced the same to the individual country. Determining the processing (price) category of a mailpiece (letter, flat, or package) depends solely on the physical dimensions of the piece without regard to address placement. The longest of the three dimensions is considered the length for flats and packages. If the mailpiece is a letter, the length is the dimension parallel to the delivery address as read.
Except for the minimum size for mailing (5-1/2 inches by 3-1/2 inches), the maximum weight for large envelopes, and the maximum weight and size limits for packages, all other standards for First-Class Mail International service are the same as domestic First-Class Mail service. Notice 3-S, First-Class Mail Shape-Based Pricing Template, can be used for First-Class Mail International items to determine the maximum physical size for letters and flats, as well as to check the aspect ratio of letters. Notice 3-A, Letter-Size Mail Dimensional Standards Template, can be used to determine maximum physical size for letter-size pieces, and the aspect ratio. A nonmachinable surcharge applies to letters determined to be nonmachinable. Package prices are applied to flats determined to be nonmachinable.
International Shipping Services
Global Express Guaranteed
Published GXG prices will increase 5.2 percent, on average. We continue to offer a 10 percent reduction (now referred to as commercial base prices) for customers who use Click-N-Ship service, and customers who are registered users of PC Postage service.
Express Mail International
Prices for Express Mail International service will increase by 6 percent, on average. Customers using Click-N-Ship service and customers who are registered users of PC Postage will continue to be eligible for commercial base prices 8 percent below retail prices.
We are expanding commercial base prices to include customers paying postage through an EMCA or permit imprint advance deposit account and using USPS-provided Global Shipping Software (GSS) for mail preparation and Customs-related functions. Customers using permit imprint must meet manifesting and permit imprint requirements. Permit imprint does not qualify for any service or postage guarantees.
In addition, we are adding commercial volume prices for customers who pay postage through an EMCA and use approved software:
Annualized minimum of 1,000 pieces or $20,000 postage: 10 percent below retail.
Annualized minimum of 3,000 pieces or $60,000 postage: 12 percent below retail.
A customer will receive an incentive of 8 percent during the first postal quarter of the initial mailing and through the subsequent full postal quarter. Thereafter, the incentive for each postal quarter will be determined by the actual annualized volume or amount of postage paid for Express Mail International items mailed in the previous full postal quarter.
We will continue to offer additional volume pricing through customized agreements.
Priority Mail International
Priority Mail International prices will increase by 6.1 percent, on average. Price increases vary by country group and weight increments. Prices for the flat-rate envelope and regular flat-rate box also will increase. The larger flat-rate box introduced March 3 remains unchanged, priced at $29.95 to Canada and Mexico and $49.95 to all other countries. Customers using Click-N-Ship or PC Postage service will continue to be eligible for commercial base prices 5 percent below retail prices.
We are expanding commercial base prices to include customers who pay for postage through a permit imprint advance deposit account and use USPS-provided GSS for mail preparation and Customs-related functions. We will continue to offer volume pricing through customized agreements.
For files of the new rates click here
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