Shaped Based Pricing 

– Not a New Idea

Mail Center Managers have expressed concern regarding how to handle their mail under the new Shape Based Pricing (SBP) soon to be implemented by the USPS. Why the change? Seventy cents of every dollar spent by the USPS is on labor. The USPS must find ways to improve the efficiency of their operations by reducing the labor cost component of their operations. Work share incentives have long been a part of the rate structure, where mailers who perform some of the work for the post office before the mail enters the mail stream are rewarded with postage discounts.

 

Under shaped based pricing those who mail in the most easily automated format (letter envelopes) will no longer pay the same as those who mail in larger (or thicker) envelopes or cartons for the same weight. The cost of handling the larger pieces will now be greater in recognition of the increased cost of difficult to handle mail.

 

Interestingly, the idea of shaped based pricing is not new; the United Kingdom successfully implemented a similar rate structure in August of 2006.

 

The new structure will require mailers to determine the correct postage for items based not only on weight but by the dimensions of the piece as well. Not only will there be increases in postage costs, but many mailers anticipate budget busting increases in labor to deal with the extra handling that the mail will require. Additional increases in postage costs beyond the actual price increases are anticipated as people may “over post” their mail to ensure delivery.

 

For Hasler customers, using commercial rated Whisper Jet machines, your decision to acquire a modular machine was very prudent.  There are upgrades that can be added to this equipment at a very reasonable price that will automate a large part of the SBP decision process. This same solution was introduced in the United Kingdom last year. The solution (Dynamic Weighing Platform) proved very popular there, but even more important, the solution is reliably processing the mail more efficiently than it was before, thus minimizing the impact of increased postage. For those of you that purchased a DWP already as a part of your system, an inexpensive field upgrade kit will be available; you will not need to purchase any additional equipment beyond the upgrade kit.

(Back to Newsletter)