USPS® Proposes Major Changes and Price Changes Effective January 27, 2019
The USPS® filed a request to the Postal Regulatory Commission on October 10, 2018. These changes are still subject to approval but if approved, as expected, it will not only change pricing but will impact how we mail. The good news is that the overall price increase for First-Class® Mail, Extra Services and Packages Services is only about 2.5%. Savvy mailers will seek out opportunity in this rate change because in some categories there is a fairly significant price hike but there are also price reductions. We did not mention all of the proposed changes (that will come after it has been approved) but here are the key highlights.
* On November 13, the Postal Regulatory Commission approved the proposed rate changes. A more detailed overview of the coming changes will be released soon.
There are big changes to First-Class® Mail. The price of a 1 ounce stamp will jump by 10% from 50¢ to 55¢ – the biggest hike since 1991. However, for business mailers that use a Postage Meter the price of a 1 ounce metered letter will only be 50¢, a savings of 9%! What’s more is that the USPS® is reducing the price of additional ounces from 21¢ down to only 15¢.
|First-Class Single Piece Mail||Current Price||Jan 27, 2019||Change|
|Letter (1 ounce) stamp||$.50||$.55||10.0%|
|Letter (1 ounce) postage meter||$.47||$.50||6.4%|
|Letter (2 ounce) postage meter||$.68||$.65||-4.4%|
|Large Envelope (1 ounce)||$1.00||$1.00||0.0%|
- Postage meters save 9% over stamps. The annual savings really adds up.
- Get more out of your letter mail. An additional ounce is only 15 cents so smart mailers may include additional valuable correspondence or marketing information to an envelope.
- Minimize the use of large envelopes for weights less than 3.5 ounces. Consider folding the documents in half and using a 6×9 envelope.
First-Class Package Service
The postal service is making a big change to First-Class Package Services by adding zone based pricing. Currently the rate is determined by the weight the package. As of January 27, 2019, you must also determine the zone in order to calculate the rate similar to Priority Mail® and other Package Services. There are 9 zones, with zone 1 being the closest to the shipper. The greater the weight and further the distance, the higher the price. Overall the price increase for retail packages is 13.3% and 11.9% for commercial packages.
- Your postage meter will prompt users for a zip code to automatically calculate the zone, make sure users are aware of the change to prevent confusion.
- Using a shipping system, like the FP MailOne™ software will qualify you as a commercial mailer and you will receive discounted pricing off retail rates.
Priority Mail® is still a smart choice for shippers. This is because Priority Mail® offers many benefits over the carriers like flat rate price options, a wide variety of free packaging, Saturday delivery, no fuel surcharges, no residential surcharges, includes $50 of insurance and the best end-to-end tracking with most delivery times between 1-3 days. On average retail rates will rise by 6.6% but Commercial Base® Pricing will only rise an average of 3.2%. The big change within Priority Mail® that shippers need to take notice is the changes to Dimensional Rating (DIM). See below for more information.
|Priority Mail® Retail||Current Price||Jan 27, 2019||Change|
|Flat Rate Envelope||$6.70||$7.35||9.7%|
|Legal Flat Rate Envelope||$7.00||$7.56||8.0%|
|Padded Flat Rate Envelope||$7.25||$8.00||10.3%|
|Small Flat Rate Box||$7.20||$7.90||9.7%|
|Medium Flat Rate Box||$13.65||$14.35||5.1%|
|Large Flat Rate Box||$18.90||$19.95||5.6%|
- Commercial Base® pricing reduces costs by up to 40.4%
- When shipping Priority Mail® use a solution like FP’s MailOne™ software to create shipping labels with tracking and qualify for Commercial Base® Pricing.
- Take advantage of free USPS Priority Mail® packaging
Priority Mail Express®
Priority Mail Express® is a guaranteed delivery service with most delivery next day. Still competitive with other overnight services, the rates will rise by a nominal 3.9%.
|Priority Mail Express® Retail||Current Price||Jan 27, 2019||Change|
|Flat Rate Envelope||$24.70||$25.50||3.2%|
|Legal Flat Rate Envelope||$24.90||$25.70||3.2%|
|Padded Flat Rate Envelope||$25.40||$26.20||3.1%|
- Priority Mail Express® Flat Rate Envelope Commercial Base® Pricing is $22.68 saving 11% ($2.82) over retail
- When shipping Priority Mail Express® use a solution like FP’s MailOne™ software to create shipping labels with tracking and qualify for Commercial Base® Pricing
- Take advantage of free USPS Priority Mail Express® packaging
- Go to USPS.com to schedule a free pickup during your regular mail delivery time
DIM Weight – Dimensional Rating
The USPS® is making big changes in this area. DIM weight a volumetric weight. The Postal Service and other carriers use DIM weight to apply additional pricing to larger parcels with lower weight. For example a lampshade is large but light. Items like this are subject to the volumetric weight versus the actual weight. DIM weight is calculated by multiplying the (L) x (W) x (H). If the result exceeds 1,728 cubic inches, divide the result by 166 and round up. You will use the actual weight or dimensional rate, whichever is greater.
Currently the USPS® use DIM rating but they are changing two things: the divisor and the zones that DIM applies. The current divisor is 194 but will be reduced to 166. By reducing the divisor, more packages will be subject to the DIM weight rather than the actual weight resulting in increased costs for some shippers. Currently only zones 5-9 (further distance zones) are subject to DIM weight rules. The proposed changes will apply to all zones.
* The DIM Weight updates have been pushed until June 23rd, 2019.
Keeping up with Change and Leveraging Change
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