October 24, 2018

The big surprise in the 2019 rate increases, as yet not fully explained or understood, was the announced 10 percent increase in the single-piece stamp rate from 50 to 55 cents.  Many nonprofits use First Class Mail stamps on outbound and/or response letters.  They do this because it increases response rates.  These mailers will be faced with decisions about their mailing budgets and plans.

Nonprofit mailers that use First Class stamps have the option to buy as many Forever stamps as they can before the January 27, 2019 rate increase.  Mailers can use the USPS StampsNow program to order bulk quantities of stamps.  Find out more by emailing StampsNow.Info@USPS.gov or by calling 1-800-STAMP24 (1-800-782-6724).

Forever stamps are an option only if mailers want to use the full-rate single piece stamps.  Some nonprofit mailers prefer to use multiple small denomination stamps adding up to the full rate on response envelopes.  They will have to absorb the 10 percent increase if they want to continue because these stamps are not available as Forever stamps.

One-Ounce Single-Piece First Class Mail          2018         2019    Change    % Increase

Stamp (available as Forever at full rate)                         .50            .55         +.05            +10%

Metered Mail (including customized postage)              .47            .50         +.03           +6.4%

Qualified Business Reply Mail (High Volume)             .498         .549       +.051          +10.2%

Another option in First Class postage is metered mail.  In 2019, the discount given by USPS will increase to 10 percent versus stamps.  The approved providers of postage meters are shown on the USPS postage options page.

The metered mail category also applies to customized postage, already used by some nonprofits through USPS partners such as Alliance sponsor Stamps.com.  If used on response envelopes, custom postage at 50 cents might confuse some donors who know the stamp rate is 55 cents.  But it might be worth some explaining, given the large 5 cents discount.  Customized postage allows the user to place their own image on the stamps, but they are not available as Forever stamps.  Additional fees charged by the provider must also be considered.

Finally, many nonprofits use business reply mail (BRM) on response envelopes.  These indicia have the advantage of only being paid for by the mailer when they are actually used by a donors/members.  And quite a few nonprofit mailers suggest that donors place their own stamps on the BRM envelope to save the charity money.  The stamps on a BRM envelope prompt a postage refund from USPS, net of fees.  Use PS Form 3533, Application for Refund of Fees, Products, and Withdrawal of Customer Accounts.

The most widely used version of BRM, high volume qualified business reply mail, is going up 5.1 cents or 10.2 percent next year to 54.9 cents.   And additional fees are charged by the Postal Service to help cover their cost of accounting for the program: $710 annually and $2,402 quarterly.  But at least you don’t have to pay a permit fee too.  And of course, the big advantage of BRM is that you only pay for actual responses.

It appears that the Postal Service has decided that single-piece First Class Mail is highly price inelastic compared to other categories of First Class.  So, it is hitting it with a very large increase while raising presorted First Class only 1 percent, and lowering both additional ounces and flats rates.  Already, there is speculation about what will happen next year, especially since USPS has touted the perceived benefits of five cent increments for stamps.