Postage survival guide: Five ways to offset USPS rate hikes

We all heard it was coming, but a postage increase three times the norm was NOT predicted by anyone in the mailing industry. While it’s true, the Postal Regulatory Commission recently hit direct mailers with a substantial increase, there’s no need to panic. SeQuel Response has outlined below five steps that you can take to help offset the escalation of postage in 2014.

What happened?

On December 24, the Postal Regulatory Commission approved the U.S. Postal Service’s full 4.3% request for an exigent rate hike on Standard Mail, affecting magazines, newspapers and direct mailers. This is in addition to a cost-of-living increase of 1.6%, bringing the total increase to 5.9%.

Stamps for first-class letters will go up 3 cents to 49 cents on January 26, while bulk mail and periodicals rise 6%, a serious issue for mail-dependent industries.

Why the increase?

In its decision, the PRC blamed the Great Recession of 2008-2009 for the extreme increase. The Postal Service was looking to be reimbursed for exigent losses, determined to be $2.8 billion, to cover 25.3 billion pieces of volume lost between 2008 and 2011, according to PRC chairman Ruth Goldway.

Unfortunately for mailers, political infighting won’t solve the issues we face related to our cost-per-piece; instead, we must navigate this cost impact on our own.

How can I offset the increase?

SeQuel’s VP of Purchasing and resident postal expert, Paula Phipps, suggests five critical tactics direct mailers can employ to help minimize the postal rate increase:

  1. Switch to Standard Mail: With one low price for up to 3.3 ounces, switching to Standard Mail makes sense in certain situations. When you are sending 200 pieces or more (or 50 lbs or more) of marketing mail, newsletters or other mass communications, Standard Mail rates will save you money.
  2. Presort Software: Look for software that is CASS and PAVE certified. These features will increase your accuracy and help you comply with Postal Service requirements.
  3. Mailstream automation solutions: Design your mail pieces for efficient processing and avoid the significant cost increases of non-machinable mail. Qualifying for presort automation rates can cut postal costs even more. You’ll need to print a delivery point barcode on each mail piece and use an address list that has been validated against USPS databases.
  4. Avoid Flats: Depending on the type of presort that you execute, postage for a flat size mail piece could be more than double the cost of a letter-size mail piece. Converting mail pieces from flat mail to letter-size is one of the easiest ways to cut costs and mitigate the rate increase.
  5. Entry Point discounts: Transport your mail to a Network Distribution Center or Sectional Center Facility and use commingling for even greater savings.  This strategy could even speed up the delivery of your mail. Mailers who enter their mail closer to the delivery destination can save up to 18% in postage.

To summarize:

  1. Use Standard Mail vs. First Class whenever possible.
  2. Always take advantage of automated software and presorts.
  3. Meet all standards, rules and regulations for maximum efficiencies.
  4. Use a readable barcode to be as accurate as possible.
  5. Ship mail directly to NDCs and SCFs and use commingling where possible.

 

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