As we alluded to last time, even though the overall average postage increase on January 22, 2017 will be below one percent, some types of mail will receive much larger than average increases while others will enjoy rate reductions.

Treats

• Metered Single Piece First Class Mail will decrease from 46.5 cents to 46 cents. This is the second year in a row that USPS is reducing this rate. Small businesses that can afford a meter service but don’t have enough volume to presort will benefit. With the hike in stamped mail to 49 cents, the meter user benefits 3 cents per piece.
• The biggest gift to larger First Class commercial mailers will be to raise the single price per piece up to 3.5 ounces. This is also known as “third ounce free” following on the “second ounce free” from a few years ago. It used to be you had to pay extra for every ounce over 1 ounce. Some large mailers will save as much as 25 to 37 cents per piece if they want to mail more promotional pages or use heavier stock.
• Large mailers of First Class volume will benefit greatly from the seemingly small decrease in 5-digit presort mail of 3-tenths of a cent. It adds up when mailers send millions of pieces.
• Flats Sequencing System (FSS) pricing was dropped from both Standard Mail and Periodicals. Those who prepare much of their magazines, catalogs, and other flat mail to carrier routes will benefit. In essence this will offset much of the hit these mailers received in the 2015 rate change. Mailers of Standard Mail carrier route letters, flats and parcels will receive an average price reduction of 3.1 percent according to the USPS.
• Some larger nonprofit Periodicals mailers will get rate reductions, as the USPS says the range will be from increases of 0.9 percent to decreases of 3.3 percent.
• Mailers of Standard Mail high density and saturation flats and parcels will enjoy an average 2.1 percent rate reduction, according to the Postal Service.
• The “Share Mail” promotion is an opportunity for nonprofits to extend their mailings beyond their lists. It is like business reply mail, but the recipient addresses the piece to someone they think might be interested. Only when the Share Mail piece is used does the nonprofit mailer pay the postal, much like business reply mail. USPS will be offering postage discounts to try out share mail under the Earned Value Reply Mail promotion. Contact mailingpromotions@usps.gov for information.
• Nonprofit Standard Mail sent from origin will benefit from price reductions in several categories:
• Letters (5-Digit Auto entered at Origin): 0.140 to 0.136 -2.9%
• Carrier Route (Flat entered at Origin): 0.214 to 0.209 -2.3%
• High Density/Saturation Letters (Saturation Letter entered at Origin): 0.120 to 0.111 -7.5%.
  

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Tricks

• Anyone who uses First Class Mail stamps will be hit with a 4.3 percent rate increase from 47 to 49 cents. This was offset by the many decreases and unchanged rates for commercial First Class mailers. In fact, it appears that most of the First-Class rate design was driven by the policy decision to take the stamp price back to the exigent surcharge level. The USPS pointed out in its release: “Stamp prices have stayed consistent with the average annual rate of inflation since the Postal Service was formed in 1971.” We conclude that this means USPS will be happy to operate under the CPI price cap indefinitely. (Not!)
• Nonprofit mailers who use First Class stamps to increase donor response rates will face big increases in cost and will likely reduce the use of stamps. Nonprofits use stamps on both outbound letters and response envelopes. Those who use Forever stamps can stock up on as many as they can afford at 47 cents before January 22. But some also use denominated stamps that prove to increase response rates. A “silver lining” alternative is to try out “Metered Postage” in the form of customized stamps issued by providers like com. They will be priced at 46 cents, 3 cents below USPS stamps, and allow the mailer to use any image they want. Some nonprofits have been testing this concept with their logos. For at least the next year, it can be done at a significant cost savings compared to USPS stamps.
• Nonprofit Standard Mail automation letters will be getting much higher than average rate increases. DNDC letters will range from 2.8 to 3.2 percent increases, while DSCF letters will increase from 4.2 to 4.3 percent. This is a big deal because these are the bread and butter fundraising letters than most larger nonprofit mailers use to fund their missions. The very large increases are driven by the regulatory need to reduce the measured “pass-through” of internal USPS costs savings to the customers who do some of the work. Current Standard Mail letter workshare discounts pass through well over 100 percent of the savings USPS measures. The Postal Regulatory Commission has been urging the Postal Service to correct these overly-generous discounts over a period of time. Ironically, some of these large nonprofit mailers being hit on Standard letters are the same ones being stung by the 4.3 percent increase in First Class stamp prices. Apparently, this double-whammy did not enter into the USPS thinking about these rate changes.