In the November 2013 Mailing Systems Technology E-News, I had written an article titled “Faring the Postal Rate Storm” that went over the potential postage increase. Since then, the USPS has finalized the rates and I wanted to make some updates to this article that I thought you might find helpful. Also, since this rate increase is happening this month, it may be helpful to properly prepare and update budgets.
Overall, prices are expected to go up by 2-3%. Postal rates are supposed to be tied to the Consumer Price Index which is running in the 2-3% range. The USPS needs their rates to be in line with this index except in the following circumstances:
- Unused Rate Adjustment – They did not adjust past rates to the full levels allowed.
- Exigent Circumstances – They have drastic conditions that require them to raise rates to higher levels. This is our big worry because anyone could argue that we have justification for larger increases.
For the past 15 years, I have been creating comparison charts for my clients that go over the changes in rates to show how it will affect their budgets. The reason that I do this is that when the USPS talks about a 2-3% increase, 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 (Previous and new rates side by side) to see these differences. Please click on this link to get a copy of these rates in a simplified PDF format.
The remainder of this article is to pull out areas where the increases are going to be higher or lower than the averages and how the changes will affect you.
As you can see from the charts, letters and post cards are going up $.01 and flats are increasing by $.02 (1-2% increase). The big news is with First Class Parcels, which are going up 3-6%. I am going to guess this is because of the popularity of this service with e-commerce. The USPS is the only game in town for residential shipments that are less than a pound. Even with the increase, being able to ship a 6 ounce parcel for $2.58 including Delivery Confirmation at no charge is still huge bargain.
The price change range from 1-3%, with the largest increases at the 5 digit levels. This is different from the norm where they are on the pieces with the least density. The big news is the additional ounce rate for flats increasing for $.17 to $.20 per piece (an 18% increase). This $.03 may not seem like a big deal, but if you are sending a 7 ounce, 3-digit, automation flat, your price increases goes from $1.594 to $1.794 or 13%. Look at the chart below to see the full impact of this increase as items get heavier.
Overall rates have increased by 1-4%. Again I find it strange that the highest increases occurred for the higher sort levels where they are typically offering greater incentives. It appears that the entry level discounts for letters and flats remain unchanged.
The main changes from the proposed rates occurred with Standard Mail and Non Profit Flats. Rates went up overall about 1% but this could be slightly higher or lower based on the sort level and weight.
It is very difficult to compare rates for shipping services because you need to factor weight, zone, size and level of service into the equation. There is no way to give you a comparison on all of these, so I am highlighting three different common weight and zone groupings for Priority and Express Mail. We are using Commercial Base Rates, which are what you can expect to use through a Postage Meter, PC Postage or from USPS.com. As you can see from the table, the rates have increased from 2-8%.
There are a couple of interesting points that are worthy of bringing up around special services:
- Certified Mail with Return Receipt – Retail increases from $5.30 to $5.65 (7% increase) and with Electronic Notification from $4.10 to $4.35 (6% increase).
- Retail Delivery Confirmation on Priority Mail – It used to be $.75 each and is proposed to be FREE!
Overall if you were to increase your budget by 3% for 2013 you should be safe. It is impossible to compare every rate but these are the most common mail classes used by business mailers throughout the United States. I hope this format is an easy way to plan for the upcoming increase and to make comparing rates simple.