Posts Tagged Rate Increase
U.S. Postal Service to Maintain Current Product and Service Prices
Oct. 1, 2014– The Governors of the U.S. Postal Service have decided not to seek a price change for mail and shipping products and services in January in part because of the uncertainty regarding the exigent price increase. This means that the current pricing of postal products and services will remain in effect through the holiday season and early part of 2015. The Board will continue to evaluate pricing strategies and will communicate about any potential price change filings in early 2015. As always, the Postal Service will provide customers advance notice of any price changes.
Please visit us on the USPS Industry Outreach website.
Thank you for your support of the United States Postal Service.
–Consumer and Industry Affairs
Will They or Won’t They? Planning for USPS Rate Increases
It’s that time of year when my customers want direction and help planning their postage budgets for the coming year. The past few years we’ve had notice in October or November of a coming rate increase to be effective in January. For some working on budgets, this is late in the game so we fudge a little by going with the tried-and-true formula of postage rate hikes based on the rate of inflation.
This year, however, who knows what’s coming. Rates could go up or even down. Rates could decrease sometime in the coming year due to the expiration of the exigent rate case of last year. Right now it looks more like a guessing game.
Below is a link to an informative article discussing potential rates for 2015. It gives a nice explanation of the situation as a whole.
So it’s going to be a tricky year for mailers working on 2015 budgets. As always, we will notify our customers of rate changes as soon as they are made available.
Tips to Manage Postage Rate Increase
Now that the Postal Service has raised rates again (this is the largest rate hike in the past 11 years), it seems like a good time to review steps you can take to help manage your postage costs.
- Take advantage of a local mailhouse or presort vendor. Presorting your mail lets you take advantage of reduced postage rates. There are many ways you can work with a vendor; they can manage your data, print your mailpiece and mail it for you or perhaps all you need is a daily pick up of your already prepared mail. Either way, savings are there for you.
- Keep a clean, healthy database. Make sure all of your addresses are complete, correct and updated. When you receive Undeliverable As Addressed mail back from USPS make sure you update your data accordingly. No sense in mailing people who have moved or are deceased.
- Dedupe your data. If your data includes multiple contacts with similar sounding titles within a company, can you mail to just one of those people? Are you seeing duplicates such as John Sample and John Q Sample at the same address? Check for duplicates both by name and address.
- Personalize and target your mailing. Studies have shown that the more personalized and targeted your offer is, the greater response you will receive. Build and manage data such as last purchase, date of last service or purchase, geographic area or household income. The list of ways to segment and create relevant messages/offers is endless.
- Use multi–channel marketing. Follow up your mailed promotion with email. Try to keep the same look and feel of your mailpiece. Include a link to your website, other marketing page or survey if appropriate. You can use a QR code or pURL on your mailpiece to drive recipients to your website.
Postage rate increases are uncomfortable for mailers. The USPS points out that the increases over the past few years have kept pace with inflation. The change is intended to generate $2 billion in annual revenue for the Postal Service.
As a reminder, below are the new full pay, retail rates.
- 1 ounce First Class letter – $0.49
- Each additional ounce $0.21
- Postcards $0.34
- 1 ounce letters to all International destinations $1.15
Increased 2014 Postage Rates – Effective January 26, 2014
As per a news release on September 25, 2013 prices for most Postal Service mailing products and services will change on January 26, 2014. This includes First Class Mail, Standard Mail, Periodicals, Package Services and Extra Services.
The proposed changes are intended to generate $2 billion in incremental annual revenue for the Postal Service.
Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:
- Letters (1 oz.) — 3-cent increase to 49 cents
- Letters additional ounces — 1-cent increase to 21 cents
- Letters to all international destinations (1 oz.) — $1.15
- Postcards — 1-cent increase to 34 cents
Stamp prices have stayed consistent with the average annual rate of inflation of 4.2 percent since the Postal Service was formed in 1971.
Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted.
In a letter from Board of Governors Chairman Mickey Barnett described the “precarious financial condition” of the Postal Service and the “uncertain path toward enactment of postal reform legislation” as primary reasons for seeking price changes above the CPI increase. He also indicated that the price adjustment above the CPI increase is necessary in order to ensure that the Postal Service will be able to maintain and continue the development of postal services of the type and quality which America needs.
“Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” said Barnett in the letter. “However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”
Except in exceptional or extraordinary circumstances, postage price increases are capped at the rate of inflation as measured by the CPI-U. The Postal Service is filing a price increase above CPI-U due to extraordinary and exceptional circumstances which have contributed to continued financial losses. The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year, and has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.
If your business is not already using a presort vendor, now is the time to look into that service. With ever increasing postage rates, why not take advantage of discounted rates presort houses are able to offer you?
Possible Exigent Rate Increase?
There has been talk lately of the USPS requesting an exigent postage rate increase from the Board of Governors.
What is an “exigent” postage rate increase?
The current law is that postage rate increases are tied to the Consumer Price Index. The rates increases we have seen annually over the past few years fall into this category. While no one particularly likes an increased cost (although USPS remains the best bargain for mail worldwide), tying it to CPI makes budgeting fairly simple.
Merriam-Webster’s dictionary defines exigent as “requiring immediate aid or action” or “requiring or calling for much”. In the case of the Postal Service, this is a request for a postage rate increase above the CPI when there are extraordinary circumstances.
What are the extraordinary circumstances? Uncertain or lack of postal reform certainly plays into it, along with continued financial losses. In addition, the USPS has made efforts at internal cost containment. Is it enough?
The Direct Marketing Association (DMA) reports in its Direct from Washington newsletter:
With reason to believe that the United States Postal Service (USPS) Board of Governors may vote on a potential exigency rate increase in early September, the Affordable Mail Alliance (AMA), including the DMA, sent a letter to the Governors voicing their opposition of such an increase. The letter expressed concern about the negative effects that would come with such an increase, especially for the mailing industry and its suppliers. The letter recognized the continued financial struggles that confront USPS, but also stated that an exigent rate increase is not the solution to those struggles. With recent improvement in the USPS balance sheet, the letter stated that an exigency filing ‘at this point would be premature’.
Strahm will keep our customers up-to-date with decisions and potential rate increases.
Have You Stocked Up On Forever Stamps Yet?
Just a reminder that postage rates will increase this Sunday, January 27th. A summary of a few of the changes are detailed in the tables below – a more comprehensive listing can be found with the USPS at http://pe.usps.com/. Business mailing rates will be changing as well during this time. If you work with a business mail provider then they will be able to tell you your new rates and any applicable changes.
Forever stamps are a great way to help combat the rising cost of postage. The USPS has released a handful of new forever stamps in 2013 – a few of the new designs can be seen below. Plan ahead and don’t be caught off guard on Monday!
Increased 2013 Postage Rates – Effective January 27, 2013
Less than a year ago the USPS increased postage rates a penny and rates are going up again in 2013. Overall, prices will increase an average of 2.6 percent for each class of mail. The Postal Service filed new mailing service prices with the Postal Regulatory Commission (PRC) in October 2012 and the changes were approved within the next month. By law, USPS cannot increase mailing service pricing no more than the rate of inflation, based on the Consumer Price Index. A completely self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations.
Highlights of the pricing changes include:
– First-class letters will increase one cent up to 46 cents
– First-class postcard will increase by one cent to 33 cents
– Flats will increase by two cents to 92 cents
– International first-class pricing will change to one flat rate of $1.10 to any destination in the world. The USPS has also introduced a new Forever stamp for international use, called the Global Forever stamp. This new stamp will always be sold at the price of a single-piece first class international stamp.
– Forever stamps also will still be available and can be used whenever they are needed, as they don’t have a denomination. Forever stamps will also increase to 46 cents.
Several new shipping services products will be available in January as well as increased pricing. New domestic retail pricing for Priority Mail Flat Rate products include:
– Small Box – $5.80
– Medium Box – $12.35
– Large Box – $16.85
– Regular Envelope – $5.60
– Legal Envelope – $5.75
– Padded Envelope – $5.95
Prices for other mailing services including Standard Mail, Periodicals, and other business class mail will also see price increases in a variety of categories. For more detailed pricing information from the USPS visit www.usps.com/prices. Still need more? Strahm also offers a Customer Resource Center containing up to date information regarding the January 27th rate increase and much more!
USPS Rate Increase BUT Direct Mail Is Still A Bargain!
The USPS announced last week another postage rate increase. The cost of a one-ounce First Class stamp is going up to $0.46 per piece in January 2013. The rates for business mail – automated presort mail – will also increase.
You may be thinking that using other channels such as email, texting, or another carrier such as FedEx or UPS could be the solution in the face of rising postage rates.
Not so quick. Direct mail is still a bargain and a great way to generate sales leads. Email boxes are flooded with offers and if you don’t know a prospect, this constitutes spamming. And the rate at which email recipients open and click through an offer continues to fall.
How can you get the most from your direct mail campaign? Remember the 40/40/20 rule. 40% of your chance of success will come from your audience, 40% from your call to action and offer, and 20% from your mail piece design (color, creative, etc).
Here are just a few tips for making an offer to your prospects:
- Free trial
- Free information – such as a white paper
- Free gift with order
- Free Sample (see a trend here with the freebies?)
- Conditional sale – send it now, bill me later
- Club offer – join the club and receive better deals
- Contests – prizes should tie back to your product or service
- Time limit – must respond within 30 days
- Free returns – return within 30 days for a full refund
Tweaking direct mail lists can increase response rate, but take a look at varying offers and even packaging. What are your ideas for increasing response using the 40/40/20 rule?