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October 31, 2016

USPS Outlook for 2017 : : Proposed Price Increase, Standard Mail Rebrand

11.1.2016_USPS Postal Rate Guide.jpg

Change is on the horizon for the United States Postal Service (USPS). On October 12, 2016, the USPS filed proposed price changes with the Postal Regulatory Commission (PRC) that, if approved, are planned to take effect on January 22, 2017. At the same time, the Postal Service announced that Standard Mail will be rebranded as USPS Marketing Mail.

Postage Price Increases

The proposed changes will increase postage by an average of 1-2%, with a 2-cent increase for a First Class stamp and a 2.5% increase for Special Services.

Proposed price changes of note to direct mailers include:

  • a single price for First Class Mail commercial presort letters weighing up to 3.5 ounces
  • a reduction in the one ounce meter price to 46 cents
  • increasing the piece pound breakpoint from 3.3 to 4.0 ounces for Marketing Mail Flats and Parcel shaped pieces to encourage mailers to include more content

The First Class Forever stamp will return to its former price of 49 cents, up from 47 cents after the PRC lifted the exigent surcharge. Postcards, international mail, and additional ounces for letters will not be affected.

January’s proposed price increases follow the April 2016 removal of the PRC’s exigent surcharge, which reduced postage rates by an average 1 to 2 cents per piece, resulting in an annual loss of $2 billion for the USPS. The new proposed pricing strategy reflects the desire of the USPS to increase the value of commercial First Class mail – which depreciated after surcharge pricing was lifted and suffers from the impact of declining volume – and returns postage rates close to where they were prior to the surcharge removal in April.

The USPS believes the January 2017 price changes will have minimal impact on the public and are consistent with the rate of inflation.

The PRC will review the proposed changes before the new prices take effect on January 22, 2017. If approved, this will be the first stamp price increase in three years.

Samples of proposed pricing changes:

  Exigent Price Current Price Proposed Price % Change
(Current to Proposed)
First-Class Letters        
Meters $0.485 $0.465 $0.460 -1.1%
Auto AADC $0.416 $0.399 $0.403 1.0%
Auto 5-D $0.391 $0.376 $0.373 -0.8%
Marketing Mail Letters        
Auto 5-D DSCF $0.221 $0.211 $0.217 2.8%
Saturation DSCF $0.157 $0.151 $0.155 2.7%
Flats - Piece Rated        
Auto 5-D DSCF $0.348 $0.333 $0.335 0.6%
CR Basic DSCF $0.256 $0.245 $0.252 2.9%
CR/CR Pallet DSCF $0.251 $0.240 $0.232 -3.3%
CR/CR Pallet DSCF $0.243 $0.233 $0.221 -5.2%

Standard Mail Becomes USPS Marketing Mail

According to a statement from the USPS, Standard Mail has been rebranded as USPS Marketing Mail in order “to better align the product name with our customer’s use of this mail class.” The new name is meant to encourage marketers who do not currently utilize direct mail to reconsider the role it plays in a successful integrated strategy. USPS Marketing Mail will start appearing on postage statements beginning January 22, 2017.

Notable changes within the USPS Marketing Mail class include eliminating the Flats Sequencing System (FSS), a sorting system for flat-mail such as large envelopes, magazines and newspapers. Removing FSS will “ensure that mailers pay for flats based on their volume density instead of the equipment flats are processed on.”

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