It’s official. This year’s postal rate increases have been approved by the Postal Regulatory Commission (PRC) and they go into effect Sunday, January 27, 2019. Unlike previous years, which for the most part carried across the board percentage increases, the 2019 postal rates are a bit more complicated. Some mail class rates have gone up significantly, while others have stayed the same, and a few include price decreases.
There’s a lot to cover so we’ve broken up this post to make it easy to digest. Here’s what we’ll cover:
- An overview of the changes you can expect among common rate structures—both commercial and retail.
- Ways to save money by optimizing your mail class
- A tool to help you update your direct mail budget for 2019
Plus we’ve updated our Commercial Postage Rate Sheet covering the most widely used mail classes among our direct mail clients and how they’re changing for 2019.
Changes to Postage Rates for Popular Mail Classes
First-Class Mail® Retail
Although most of our direct mail customers aren’t using retail mail services, we’re all still consumers so it’s an important one to cover. Retail rates are the prices you pay either online or at the post office counter for single-piece mailings.
Although the price of a stamp is going up from 50 to 55 cents (one of the largest increases in history), it’s not all doom and gloom in the retail category. The additional ounce surcharge has been reduced from 21 cents to 15 cents, so you’ll save money as your mail gets heavier. In addition, the rates for flats are staying the same but since the additional ounce surcharge has gone down, you’ll see a drastic reduction as flats get heavier (as long as they remain 13 oz or less which is the max for flats).
First-Class Mail® Metered Letters
Although the postage you’ll pay using a meter or PC postage solution is still going up by 3 cents, it offers a 5 cent savings over retail stamps. By switching to a postage meter for letters, you’ll pay .50 cents per piece versus .55 cents which can add up to significant savings depending on how much mail you send (see the chart in the cost savings section below).
First-Class Mail® Commercial
Commercial pricing and automation discounts are available for presorted letters, flats, and packages with a minimum quantity of 500 mailpieces. To qualify mailers must use a presort service, barcoding or other automation software, or outsource the mailing to a provider like Shawmut. Whether direct mailers use First-Class or Marketing Mail (which we cover below), commercial rates are based on sort levels, delivery zone density, and where mail enters postal operations. On average, commercial rates are 18% less than retail rates.
For example, if you have a mailing of 10K pieces and 150 pieces are going to a 5-digit zip code like 90210, those pieces will get the 5-digit rate. If you have 150 pieces going to a grouping of 3-digit zip codes (90210, 90310, 90410) you get the 3-digit rate. Everyone else gets the mixed AADC rate and if you manually sort mail (without using an automation software) you get the presorted non-automation rate.
Fortunately, for First-Class Commercial the rate increases are minimal for 2019. On average, letters will see a 1% increase and there will be no change to postcard rates. Flats do have up to a 3% increase however that’s still offset by the reduction of the additional ounce surcharge so you’ll actually see cost savings as weight goes up.
Marketing Mail® Commercial and Marketing Mail Nonprofit
If you’re sending letters, you’ll see about a 2% increase overall regardless of sort rates and about a 1–2.5% increase for non-profits. For flats, there are significant increases but fortunately, there is no change to postcard rates.
In addition to sort levels, Marketing Mail is also eligible for destination entry discounts. That means if you can move your mail further into the postal system—either to a distribution network center or sectional center facility—you’ll get a discount because your mail is closer to its final destination. When you have large volumes of mail destination entry discounts can really add up but it’s important to note that the discounts are decreasing for letters and increasing for flats this year.
Postage Savings Opportunities for Direct Mail
So now that we’ve covered the rate changes for popular mail classes, you might be wondering if you’re direct mail budget can survive these increases. Although most of this seems like bad news for direct mailers, there are some cost savings opportunities hidden among these rate changes.
Here are a few ways you can save money in lieu of increased postage rates.
- Move Away from Retail Rates: By using a metered mail, you’ll save .05 cents on letters. So if you haven’t yet invested in a metered service or worked with a direct mail provider, and you send a significant amount of mail per year, this is something you’ll want to consider. For example, if you send 200,000 letters per year you’ll save $10,000 for metered vs retail rates.
- Take Advantage of Presort and Automation Rates:
- If you send 500 pieces per day or have one-time mailings of more than 1,000 pieces you can leverage a presort service and get discounts depending on the delivery density of your mail.
- If you purchase software or work with a direct mail provider to include Intelligent Mail Barcodes (IMB) in the address block, you’ll qualify for a .003 savings across the board.
- By automating your mail for letters and flats, you can send up to 3.5 oz for the price of 1 oz.
- Automation software includes address verification so you’ll reduce undeliverable mail and wasted postage.
- Consider Marketing Mail: If your mail consists of generic content or advertising offers (versus personal correspondence or bills), send it via Marketing Mail which is less expensive than first class and offers destination entry discounts. Just be sure the 2-9 day delivery window meets your deadline.
- Convert Light Flats to Letters: Depending on the format of your direct mail piece, you may be able to fold flats to fit in 6x9 or #10 envelopes and qualify for the letter rate. By doing so you can save approximately 50% as illustrated in the examples below.
- Can You Send a Postcard? This year there is no change to postcards, which are one of the least expensive formats to send. If you’ve previously sent letters and you can reformat your offer as a postcard, you’ll save a considerable amount of postage. And don’t forget you can always use your postcard to drive people to people to a website for more information. And depending on how you get them there, you could also qualify for one of the USPS Postal Promotions for 2019.
How to Budget for 2019 Postal Rate Increases
Now that you have an overview of what’s changing and ways you can mitigate the impact, it’s a good idea to estimate the changes to your direct mail budget for 2019.
To get started, review your postage spend last year and break it down by mail class (or ask your direct mail provider for a report). Then think about any planned changes to your direct mail programs and estimate your spend for the year ahead. Finally, download this Rate Change Budget Calculator from Postal Advocate and plug in your estimated spend for each class of mail. The excel worksheet will automatically calculate the changes to your budget based on this year’s rates.