Why Your Postage Rates Could Go Down in April

Why Your Postage Rates Could Go Down in April

Since postage is the most expensive part of direct mail marketing, any postal rates changes are big news. Usually, the USPS announces a pending rate increase. On Feb. 25 the USPS filed a notice with the Postal Regulatory Commission that would reduce postage rates. Within the filing, the USPS stated:

“… It intends to remove the exigent surcharge on Sunday, April 10, absent action by Congress or the courts to make the existing exigent surcharge for Market Dominant Products and Services part of the rate base or to otherwise extend it.”

In this filing, the USPS also noted that while it “… recognizes that daily revenue fluctuations could result in a one or two day variation on when the revenue limitation is reached, our current estimate is that the revenue limitation will be reached some time on Saturday, April 9, 2016.”

The end of the 4.3 percent increase surcharge has been anticipated for some time, though the rate of collection left the actual date hard to determine. The reason there was a 4.3 percent increase was because the post office was granted an exigency rate case that allowed it to try to recoup some of the funds lost during the great recession. The court ruled that the rates could not be permanent and must be rolled back after the allotted amount was reached. That means that on April 10 we will see an overall decrease in postage by 4.3 percent.

The post office has been hoping for either legislation or court action to allow the higher rates in order to help offset the losses the post office has suffered for the past several years. The Postal Service worries how it will replace the 4.3 percent of revenue that’s been essential to keeping it in the black for the past two years. These rates have been in place since January 26, 2014, so it will be good for marketing budgets to have more money for the rest of 2016.

So let’s take a look at what some of the most common new postage rates will be:

First class single piece letter = $0.47

            First class single piece postcard = $0.34

            First class single piece flat = $0.94

            Presorted automation first class letter mixed rate = $0.419

            Presorted automation first class postcard mixed rate = $0.272

            Presorted automation first class flat mixed rate = $0.75

            Presorted automation standard letter mixed rate = $0.291

            Presorted automation standard flat mixed rate = $0.539

            Presorted automation nonprofit letter mixed rate = $0.176

            Presorted automation nonprofit flat mixed rate = $0.40

As you can see, these amounts will add up over time to marketer’s postage savings. This means you may be able to mail more pieces or add additional design elements that would not have been affordable under the current postage rates. There is still a chance that action could be taken by either the courts or Congress to change the rates, but as of now, it does appear that we will have a postage reduction starting on April 10. What will you do with your postage savings?

Source: Targeting Marketing 2016

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