May 12, 2008 Price (Rate) Change

On Monday, February 11, 2008, the USPS filed for a price adjustment (rate change) for Market-Dominant products, also referred to as Mailing Services. Mailing Services includes First-Class Mail®, Standard Mail®, single-piece Package Services (Media Mail®, Library Mail, Bound Printed Matter, and Parcel Post®), International Mail and Extra Services.

This will be the first price change under the new Postal Accountability and Enhancement Act (PAEA). In the past, the USPS would present its proposed rate changes to the Postal Regulatory Commission (PRC) (formerly the Postal Rate Commission), which oversaw a ten-month public regulatory proceeding. The Commission's findings were then sent to the USPS Board of Governors for approval. Under the PAEA, the Postal Service™ has greater pricing flexibility and may annually increase postage rates but generally by no more than the Consumer Price Index (CPI). In short, the CPI determines the price cap for Market-Dominant products. The price changes filed on February 11th were generally at or below the Consumer Price Index (CPI) of 2.9%.

The Postal Service™ maintains on file with the PRC a Schedule for Regular and Predictable Rate Changes. The Commission must display the Schedule for Regular and Predictable Rate Changes on the Commission website. By clicking on the "View CPI-U" Table link, mailers can see the 12-month average percent change in the Consumer Price Index.

Highlights of the price adjustment include:

New rates are effective May 12, 2008
Average increases by class/product:
- First-Class Mail® 2.889%
- Standard Mail® 2.875%
- Periodicals 2.710%
- Package Services 2.876%
- Extra Services 2.848%
Single-Piece First-Class Mail® 1 oz. letter rate increases from 41 to 42 cents (2.4%)
First-Class Mail® automation letter rates average increase 3.5%
First-Class Mail® additional ounce rate for single-piece remains 17 cents
Additional ounce rate for First-Class Mail® automation letters remains 12.5 cents and expands to all discount (presorted and automation-rate) First-Class Mail® letters (currently the additional ounce rate for discount letters is 17 cents)
Lower pound price for Standard Mail® saturation and high-density flats
Shape-based pricing for First-Class Mail® International letters, flats and parcels
First-Class Mail® International price groups expand from five to nine groups
Certified Mail™ increases from $2.65 to $2.70
Return Receipt, Form 3811 increases from $2.15 to $2.20; electronic Return Receipt increases from $0.85 to $1.00
Retail Signature Confirmation™ increases from $2.10 to $2.20; electronic from $1.75 to $1.80
Certificate of Mailing, Form 3817 increases from $1.05 to $1.10; Form 3877 (Firm Mailing Book) from $0.35 to $.40.

The USPS® will announce new prices for "Shipping Services", including Express Mail® and Priority Mail® in March.

Strategies and tips to mitigate postage expenditures:

There is a 5.1¢ difference between full rate (single piece 1 oz. First-Class Mail® letter) of 42¢ and the Mixed AADC letter rate of 36.9¢.There is only a 2.6¢ difference between the full rate and the presorted rate of 39.4¢. And there is a 2.5¢ savings between Mixed AADC letter rate and presorted rate. The "message" is to prepare automation-compatible mail, taking advantage not only of the lowest rates possible, but also the benefits of improved deliverability and openability!
Take advantage of the low additional ounce rate, adding inserts that turn revenue collection mail into revenue generation mail. This will increase the overall value of business mail!
Convert flat-size mailpieces to letter-size
Consider combining mailings going to the same destination, especially households. Mailing fewer but heavier pieces can provide substantial postal savings!
Consider Standard Mail® instead of First-Class Mail® for qualifying nonpersonal mailings, maintaining deliverability through automation and move update validation.

For more information and to download the May 12, 2008 USPS® Notice 123 Ratefold, go towww.pbpostalinfo.com and www.usps.com/prices.