The Anticipated Impact of the USPS Postage Rate Increases on Print and Mail Shops

On January 27, 2019, the new postage rates approved by the Postal Regulatory Commission (PRC) go into effect. The reason for the increased rates in most postal categories is to counteract the losses the USPS experiences as more and more businesses and people use digital communication systems such as email, blogs, and electronic newsletters. This shift resulted in a net loss of $3.9 billion for the fiscal year 2018. The expectation is that the rate increases will limit losses while the PRC looks for long-term solutions to the issue of reduced mail volumes. However, these increases may have the undesired effect of shifting direct mail marketing to digital formats, further reducing mail volumes and revenues.

The Changes

Not all of the news is bad. Full-Service IMB Discount is increasing from $.001 to $.003 per piece for each mailpiece that complies with the requirements for full-service Intelligent Mail. Mailing Promotions and Incentives are back and include a new category (Informed Delivery). However, they are only available for a limited time and come with restrictions but the savings make jumping through the hoops worthwhile. The goal is to encourage marketers, printers, and mailers to utilize new technology and print techniques that enhance the traditional benefits of a physical mailpiece.

Unfortunately, the rest of the news isn’t so good. The postal service will again reduce the workshare discounts on drop-shipped mail marketing letters as well as making differential changes in flats vs. letters. There is also a 10% increase in Single Piece First Class Letters – going from $0.50 to $0.55 each. Marketing Mail letter rates are increasing by approximately 2% while flats are increasing between 2% to 6% depending on various factors.

The Impact

There is debate among experts as to the extent the increase in postal rates will impact marketers, publishers, businesses and print/mail shops. Some believe that the increases are a death knell to bulk mailings while others believe it will have little to no impact on current volumes.

Despite this disagreement, there are some likely outcomes:

• Every business will evaluate their mailing processes and determine the most cost-effective choice in light of these new rates.
• They will be seeking print and mail shops that utilize the latest mailing technologies to reduce costs.
• While many marketing companies will rely more heavily on digital marketing tools, the use of direct mail pieces will continue because the shift to digital will make their print pieces stand out from the crowd.
• Direct mail companies will become more targeted, strategic and creative when sending pieces.
• Businesses will reevaluate their use of print mail and explore options that can either reduce the cost or shift various processes to a digital format.

Regardless of the potential impacts, one thing is clear. There will continue to be a strong demand for print and mail shops that utilize the technologies that deliver the lowest mailing costs. For companies seeking to take advantage of the USPS Promotion and Incentive Programs, they will send their business to providers who have the resources to qualify for them.