It seemed like just yesterday there was a postage rate increase, right? Well…actually it was on January 27, 2013, but who’s really counting. Get ready for what could be the biggest first-class, one-time rate increase in over 10 years: from 46 cents to 49 cents. Bulk rate will increase as well, albeit not as steep, going up by 1 cent. This proposed increase could result in an approximate $2 billion increase in annual revenue for the United States Postal Service (USPS), but still must be approved by the Postal Regulatory Commission (PRC). Given the current U.S. government shutdown, the PRC has been granted a temporary leave of absence and may not be able to make the final pricing decision in the near term. Although the USPS would prefer to have other changes approved instead of raising prices, in my opinion, the rate increase is inevitable.
You can imagine the impact on direct mail. If a brand aims to send out 500,000 direct mail pieces on behalf of their network partners it would have to fork out another 5k and ROI for the campaign gets squeezed. If direct mail spend is shared between you and your partners you may have to think about bumping up your co-op marketing funds to offset the increase; network participation should not fall victim to the proposed rate increase. Either way, I trust your financial picture is prettier than that of the US Postal Service.
To give you an idea of how bad the USPS financial situation is, consider this: since 2006, the USPS has reduced their operating costs some $16 billion by consolidating mail processing facilities, reducing their workforce, and curtailing delivery routes. Even with that reduction, postal rate increases occurred seven times over that same period in attempts to bring some order to a very grim financial situation. Last year alone, the USPS had a net loss of $15.9 billion.
I don’t know too many people who want the bulk of items that come in their mailboxes, but even in today’s age of emails and e-cards, there is still a need for “snail mail.” After all, the USPS is a vital part of this country’s economy, which is especially true for businesses (like those of us in distributed marketing) who rely on the USPS for direct mail, shipping, and other vital services.
Here’s a breakdown of the proposed first-class mail rate increase, which would take effect on January 26, 2014:
- Letters (1 oz.) — from $0.46 to $0.49
- Letters additional ounces — from $0.20 to $0.21
- Letters to all international destinations remain static (1 oz.) — $1.15
- Postcards — from $0.33 to $0.34