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How the New Postal Rates Affect Your Mailings and Budgets

The US Postal Service Board of Governors has just announced an increase in postage rates effective July 15th, 2007 for Periodical Class and May 14th, 2007 for all other classes. Below is an overview of these upcoming changes. It is important to understand how these changes will affect your mailings and your budgets.

The Background:

The USPS wants to VERY STRONGLY encourage mailers to design, whenever possible, mailings that are automation compatible, weigh less then 3.3 oz, and where the size falls under the Letter category. These are the pieces that are most cost-efficient to process on their automated equipment. When it comes to processing Flats and Parcels, however, the USPS internal processing costs are very high. These costs are the impetus for the increases detailed below.

Basic Physical Definitions to Help You Better Understand This Information:

Letters are defined by the USPS as:

For height, no more than 6-1/8 or less than 3-1/2 inches high
For length, no more than 11-1/2 or less than 5 inches long
For thickness, no more than 0.25
Examples: #10 Envelopes, 6x9 Envelopes, 5.5x8.5 or 6x9 Self-Mailers

Flats are defined as:

More than 11-1/2 inches long, or more than 6-1/8 inches high, or more than 1/4 inch thick
Not more than 15 inches long, or more than 12 inches high, or greater than 3/4 inch thick
Examples: 9x12 Envelopes, 10x13 Envelopes, 8.5x11 Self Mailers

Important Changes:

For certain mailings, rates are actually going down while for others, they are increasing. Here are some examples:

First Class Letters: Good news is that while the basic 1 oz first class letter rate is going up to 41 cents from 39 cents, each additional ounce rate, for letters weighing up to 3.5 oz, is going down to 17 cents from 24 cents.

First Class Flats: (e.g. 8.5 x 11, 9 x 12, 10 x 13 sizes, and Letters over 3.5 oz) rates are going up across the board. For example, assuming a 6 oz first class flat piece, current domestic postage would be $1.59 per piece whereas after May 14th, the same piece will mail at $1.65, an increase of only about 4 percent.

Important point to note is that when it comes to first class mailings, for pieces weighing more then 3.5 oz, rate increases are not so steep. But for those mailings weighing less then 3.5 oz, there is a strong financial incentive now to design those mailings as letter size pieces. For example, under the new rates, a 3 oz letter will mail at 75 cents. If the same piece is designed as a flat, it will mail at $1.14 per piece, difference of nearly 50% in postage, given the same weight but different size.

Standard Mail Regular: (for-profit bulk mail) the basic automation letter rate is going up to about 25 cents per piece from 23 cents, an increase of only about 9 percent. For flats weighing up to 3.3 oz, however, the rate is going from about 32 cents to nearly 48 cents, an increase of nearly 50 percent.

Non-Profit Standard Mail: for letters up to 3.3 oz, the basic automation rate is going up from roughly 15 cents to about 16 cents per piece. But when it comes to flats up to 3.3 oz., the rate is going up from about 20 cents per piece to nearly 35 cents per piece, increase of nearly 75 percent.

Finally, for International Mail, according to Rick Welch of International Postal Systems, rates are expected to increase by roughly 13-14%.

This issue is developing very quickly and we’ll keep you abreast of these upcoming changes as we learn more. For now, we want to share with you the latest rates charts that have just become available from the USPS. These charts can be found at the following link:

http://pe.usps.com/RateCase2007/DMM300_PDF/RatesAndFees.pdf

As you review this document, we suggest you pay special attention to the following pages as these cover majority of the mailings that our clients send out:

Pages 4, 10 and 13 pertain to first class mailings – letters, flats and parcels

Pages 11, 12 and 14 pertain to both regular standard A and standard A Non-profit class of mail – for letters, flats and parcels

Pages 28 and 29 pertain to Periodical Class

Your Success is Our Success

GRC Direct is available to review your mailpieces and help you reconfigure them, if needed. We are very happy to do this for you, our valued customers. Just contact your sales representative and we’ll be here to support you in making sense of all these changes, as well as help you in redesigning your mailings to minimize the impact of these rate increases.

Again, rest assured the GRC team is following this important issue very closely and as additional information becomes available, we’ll be sure to keep you informed. If you have any questions, please do not hesitate to contact us.