USPS® is raising rates on January 22, 2023 for the third time in 17 months with some of the largest increases in history and at significantly higher rates than inflation. We can expect these rate spikes to continue as the USPS® has stated that two increases per year will be their new norm.
Postal Advocate has been creating comparison charts for our clients that go over the changes in rates to show how it will affect budgets. The reason we do this, is to provide a true comparison versus the overall average % increase that the postal service talks about. Based on the type of mail you send, the increase could be higher or lower. 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 or side by side) to see these differences.
Hopefully, this will help you budget by seeing the impact of the most common services that you use today. At the bottom of this article there is a link to an excel tool where you can plug in your mail volumes to see the impact to your organization.
Here is a link (https://postaladvocate.com/wp-content/uploads/2022/12/January-2023-USPS-Rate-Change-Comparison-Grid_Final.pdf) to a simple chart of all the rates below
First-Class Mail® Single Piece – 2% – 9% Increase
The price of a stamp and metered letters are seeing a $.03 increase to $0.63 and $0.60. A single piece flat is increasing from $1.20 – $1.26 but the additional ounce rate is staying the same at $0.24. Post Cards are seeing the largest increase at $0.04 or a 9.1% change.
First-Class Mail® Commercial – 3% – 24% Increase
Automation letters are going up 3-4% and Flats by 10-24%. The largest increases are at the highest sort levels which will impact most large volume mailers dramatically.
With any increase, it becomes more important to look for ways to reduce costs. These are the options available:
- Use meters or online postage to save $0.03 on letters.
- Consider presort services if you run over 500 pieces per day or have one-time mailings over 1000 pieces.
- Automating your mailings in house can have drastic postage savings.
- Presort and automation levels go up to 3.5 ounces for the same base rate.
- Flats and post cards can have the same automation rates as letters.
- Consider moving generic content mail from First-Class Mail® to Marketing Mail®
Marketing Mail® (Formerly called Standard Mail) – 3-10% Increase
Marketing Mail® Letter rates are increasing at approximately 3% while Flats are going up at 5-10%. The best way to save money is to move mail closer to its final location utilizing destination entry level discounts. The savings for Letters are increasing to 10-11% where with Flats are holding at the DNDC level but increasing 15% when moved to the sectional center facility (DSCF) as you can see from the table below.
Priority Mail®, Priority Mail® Express and First-Class® Package Service – 3-10% Increase
The rates listed in the charts below are the average rate increase. Actual rates change by 1-26% based on weight and zone. One of the biggest changes is there was a specific zone called “Local, Zone 1 and 2”. This has now been split into two separate zones, where Zone 2 is seeing the highest increases.
The best way to reduce costs in this area is to convert your items from Retail to Commercial Base rates. You must process your items through an online postage solution that can generate a 4” x6” shipping label with the address, barcode and return address embedded. USPS.com only allows for Retail rates so you will need to look at third party solutions that start at about $15 per month. These average savings for items less than 10 LB (The most common for the USPS) is the following:
- Priority Mail® – 19% Savings
- Priority Mail® Express – 14% Savings
- First-Class® Package Service – 28% Savings
Additional Rate Change Items
15-38% increases in 17 months are unheard of and is impacting every organization. Mailers are going to need to look for savings strategies to help offset these changes. Our recommendation is to create visibility to all mailings and look for automation methods to reduce the cost and streamline production.
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. We have developed a Microsoft Excel-based budget calculator that you can download for free (https://postaladvocate.com/wp-content/uploads/2022/12/Postal-Advocate-January-2023-Rate-Change-Budget-Calculator_Final.xlsx) that should help you better plan for this year. Some of the most popular USPS classes are going up at the highest rates but luckily there are ways to help mitigate this through automation and technology.