The USPS Increased Rates — And its Customers Could Pay Less

January 27, 2020

The United States Postal Service’s annual price changes took effect on January 26, 2020. Current regulations mean that there are no real surprises. As usual, each postage class has winners and losers.

USPS customers should understand that price differentials are not fixed, though — mailers have options to control and improve the cost of messaging.

What mailers need to know

This year’s price increase is approximately 1.9% overall, nothing unexpected. Beyond that, some products get hit harder than others.

The losers? First-class flats over 1 oz., Periodical firm mailings, low volume carrier-route mailers, and some non-auto or non-machinable mailers all get the short end of this year’s change.

Marketers need to monitor letter drop-ship benefits as piece weights approach the upper end of the allowable weight range. The USPS drop-ship reduction program and rising transportation costs are at a tipping point — those factors could mean negative returns for some customers who drop-ship in 2020.

There’s only one winner on the price-list. First-class flats weighing under 1 oz. get a drop in rates of almost 7%.

No matter the class, though, co-mail pools offset or even negate much of the increase.

How to win when dealt a bad hand

Mail has two main factors for postage. Weight determines which processing category mail falls into. That dictates postage per piece. Customers can easily cut ounces with changes to design, paper stock, number of pages, trim size and other elements.

The other factor is sortation. The USPS gives discounts on postage to customers with presorted mail. High Density carrier-route (CRRT) mail — for participants in a co-mail pool — could counteract 2020 price increases by 20-80%. The deeper the CRRT level, the greater the discount.

USPS customers are never stuck. They have opportunities to control costs — for the time being.

What’s ahead

Changes to the Consumer Price Index for All Urban Consumers (CPI-U) set an annual benchmark that caps postage increases. The Postal Regulatory Commission (PRC) determined increases every year through 2020 based on the CPI-U.

For the most part, that’s worked fine for mailers. They have a rough idea of what to expect and can budget accordingly. Surprises aren’t great for what’s sometimes the most expensive line-item in a financial blueprint.

But things could be much different next year. The Postal Accountability and Enhancement Act (PAEA) reformed postal laws in 2006. The PRC was set to conclude its review of the 10-year program in 2017.

Three years later, it wants to enact sweeping changes to the pricing authority.

In 2021, prices might be based on the CPI-U plus other factors — declines in volume per delivery point, retirement payments, operational efficiency and meeting service standards, and an additional 2% for “non-compensatory products.”

Change is a given. Uncertainty is more difficult.

All is not lost though. What matters most is that mailers reevaluate their USPS programs regularly.

For now, Postal Service customers have opportunities to take advantage of anomalies between classes. They can make informed decisions based on a simple question — “Could we spend less to deliver our message to consumers?”

Take full control over your postage costs. Ask Quad Marketing Services to uncover opportunities to save in your mail programs. We’ll consult and execute as needed — from concept to doorstep, at scale.