Postal Pricing Head Scratchers

Sometimes it feels like you need an economics or mathematics degree to make any sense out of the postal price charts. This is especially true when the United States Postal Service ® (USPS ® ) makes changes to the prices, which can sometimes have unexpected results. In this blog, we will discuss recent changes to USPS prices for Periodicals mail and an interesting ongoing scenario with USPS Marketing Mail Nonprofit Flats.

Periodicals Zoned Pound Postage

In August 2021 when the USPS implemented price increases, they also made some dramatic changes in the structure of Periodicals pricing. During this price change, the USPS “flattened” the zoned pound prices for the advertising portion of the postage calculation.

Prior to this change, the zoned pound prices for advertising increased as the zones went higher. Under this structure, drop shipping to additional entry points often made sense, even after paying for the transportation costs – this moved mail from a higher zone (and a higher postage price) to a lower zone (and a lower postage price). The drop ship advantage was especially true for higher weight and higher ad content publications.

With the flattened zoned pound prices, there are still some savings to drop shipping for Periodicals, but nowhere near as great as prior to this change. This is a significant departure from the way the USPS has structured these prices for many years.

As you will see in the chart below (includes only the Advertising zoned pound prices), under the previous price structure, for mail destined to Zones 1 through 9, publishers could save anywhere from 3.6 cents per advertising pound all the way up to 44.7 cents per advertising pound by drop shipping mail to a Destination Sectional Center Facility (DSCF). However, under the current price structure, that same mail in Zones 1 through 9 can save only 11.6 cents per pound when drop shipping, regardless of what zone to which it is destined.

This has publication mailers scratching their heads, as they are not seeing the postage savings that they previously did, whether they were drop shipping their mail by itself or as part of a co-mailing process. In some cases, there is actually a negative savings (or a loss). There are delivery improvement aspects of drop shipping for Periodicals, so before you make drastic changes in your drop shipping or co-mailing plans, keep those benefits in mind.

USPS Marketing Mail Nonprofit Flats

While Nonprofit Marketing Mail is approximately 40% lower than regular postal rates, one would expect that the USPS would follow the same rate application process of incenting mailer behavior to present mail in the finest presort levels for both regular and Nonprofit mail.  But that is not always the case for Marketing Mail Nonprofit Flats.

Nonprofit 5-Digit preparation for destination entry flats under 4 ounces has a lower rate than Carrier Route destination entry flats, and all piece rates for over 4 ounces in 5-Digit are set considerably lower than if they were prepped to Carrier Route.  Price charts illustrating these scenarios are shown below.

Here is the head scratcher - the Annual Compliance Report continues to show a higher cost coverage to the USPS for mail prepared in Carrier Route sort versus the lower presort levels.  So why the conflicting message sent with these rates?  Unfortunately, due to this anomaly, nonprofit flat mailings do not have the same opportunity to benefit from co-mailing as their marketing mail regular flat counterparts.

It will certainly be interesting to see what the USPS includes in their upcoming price change proposals, which we expect them to file in April of this year for implementation on July 10, 2022.