On April 6, the United States Postal Service (USPS) filed a rate increase to take effect July 10, 2022. While this doesn’t come as a surprise, it does appear to be another higher-than-historic raise in rates, and on average, mailers can expect to see a postage increase of 6.5%. With this being the third increase in a row with a high average rate increase, I thought I would share how the USPS comes to this percentage and discuss a few things you can do to make this not quite as hard a pill to swallow.
Using the following granted authorities, USPS determines how large a price hike they can implement:
- Matching the Consumer Price Index (CPI) Cap at the time of the filing: 5.135%
- Adding unused price cap percentages from the prior years. This currently ranges from 0.002% to 0.037%
- A density rate authority available to the USPS: 0.583%
- A retirement-based rate authority: 0.785%
- Lastly, a 2% rate authority granted to the USPS when a class of mail is “under water” or not paying for itself. For this rate class, Flats, Parcels and Carrier-Route will see this 2% authority.
Using the above authorities, the USPS determines what amount of the allowed percentage they want to use by class and then by product within each class. They bank any unused price cap for the next increase.
Below is the percentage the USPS is planning to raise each class, and the formal announcement by the USPS. This pricing still needs to be approved by the Postal Regulatory Commission (PRC).
Class Pricing Increases:
- First-Class Mail: 6.506%
- USPS Marketing Mail: 6.5%
- Periodicals: 8.54%
- Package Services: 8.511%
- Special Services: 6.442%
Periodicals will see a price hike to Outside-County rates of 8.581% and Within-County rates of 7.751%. There was also an announcement of an increase to Editorial Pound Pricing, a decrease in the price of tubs versus sacks in mail prep, an increase in savings between basic Carrier Route and Machinable Automation 5 Digit Flats and a fluctuation of pricing for work sharing. Periodical mailers of the Science and Agriculture approved status will also see a lowering of pound pricing for zones 3 through 9.
Marketing Mail, although mentioned at an average of 6.5%, will see a higher increase dependent on the size of the mail pieces. Those starred below also have that 2% rate authority attached.
- Letters: 6.151%
- Flats: 8.543%*
- Parcels: 9.785%*
- High Density/Saturated Letters: 9.785%*
- High Density/Saturated Flats and Parcels: 4.769*
- Carrier Route: 8.657%*
- EDDM Retail: (-6.5%)
I have always been one to promote the USPS and its services, but along with many in the industry, I am wondering why we have not seen a leveling out of the pricing increases. I hope to see some of the legislation and the 10-year plan the USPS has put in place benefit mailers at some point. We also need to keep in mind there are outside contributors to consider such as the nation’s unprecedented decline in transportation availability and high fuel costs.
With that said, let’s take a look at some of the variables we can control.
- Make sure your mailing list is up to date and designed to allow for maximum address updates and duplication elimination.
- Consider targeted mailings to those who purchase the most or have taken a liking to your seasonal promotions.
- Take a look at your mail piece size, design and paper type. I know paper availability has been an issue, and there may have been instances when you had to choose a paper you don’t usually use. Make sure you are not breeching a pricing threshold with your change. Hint: we can help with this!
- Look into CoMailing procedures to reduce postage cost. A warning here though; these services are not meant to improve delivery. Often, preplanning is required to continue to see the delivery strategies you have made with your mailings.
The USPS filing can be found at https://www.prc.gov/dockets/showdocket/R2022-1.
Please reach out to your Walsworth salesperson or a member of our mailing crew and talk about possibilities to make this pill easier to swallow. Together, we can focus on mailing strategies within our control.