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Post Parade
July 16, 2007

As you are no doubt aware, postal rates last went up last May, a hike hot on the heels of January 2006’s increase. True, it’s not huge; a first-class stamp went up three cents, from 39¢ to 41¢. Post cards went up two cents to 26¢. A flat-rate Priority Mail envelope went up 55 cents to $4.60. Prior to the rate increases, postal customers could buy a “Forever Stamp” at the lower first-class rate that would be good in perpetuity and was designed to mitigate against the new rates—oh, and keep the Post Office from having to print up new “transitional” stamps every time the rates increase (no fools they).

On the plus side, wedding invitations actually decreased by five cents, so let’s be thankful for small favors.

Whenever postal rates go up, there is all the usual lamenting about how devastating this will be to marketers and mailers, though it rarely is. If you think about it, when you adjust for inflation, postal rates actually decline between rate increases, and yet no one ever waxes poetic about how great the printing and mailing business is. (Well, some do.) At the same time, a multichannel marketing environment means that marketers can defray the costs of a postal rate increase by simply switching to other, comparatively less expensive media, like e-mail. (If it sounds like the Post Office is shooting itself in the foot, it probably is.)

It’s not just that rates are going up, although that’s probably the most important issue for marketers today. In fact, the whole rate structure of the USPS has been reconsidered (the Postal Accountability and Enhancement Act comprises the biggest change to the Post Office since 1971—you can read all about it here if you’re morbidly curious—but the upshot for anyone who mails things is that greater attention will need to be paid to the physical dimensions of a printed piece.

We should console ourselves that these new rates are actually less than what the USPS originally wanted. However, the big news is not necessarily the new rates themselves, but rather how actual postage is calculated. That is, the USPS is shifting more and more toward so-called “shape-based pricing.” The thinking behind this approach was to make it easier for postal workers to automate as much of the mail processing as possible. Instead of sending an 8-1/2 x 11-inch sheet flat, for example, it’s cheaper to fold it into a letter-size envelope. There are a host of new size, shape, and thickness restrictions, as well.

On Wednesday, we’ll look at the implications for catalogers and periodical publishers. On Friday, we will offer some specific recommendations for marketers and mailers on how best to cope with these postal rate increases.

Posted by Richard Romano on July 16, 2007 | Comments (0)