Before we get into the rate changes, we want to say: We love the United States Postal Service (USPS). And we’re not the only ones. In a recent Pew Research Center survey, 90 percent of respondents said they hold a favorable opinion of the USPS. That makes it America’s Favorite Government Agency. It employs more than 600,000 people, serves 160 million homes and businesses.
However, unlike some other government agencies, the USPS generally receives no tax dollars for its operating expenses. Instead, it relies on revenue from postage sales, products, and services. In other words, it’s run like a business. And, as a business, it needed to make some changes.
In 2021, the USPS released its ten-year plan detailing operational changes it needs to make to achieve financial stability and improve service. Part of this plan includes regular price increases for Market-Dominant products, the first of which took effect on Sunday, August 29, 2021. The next increase will take place on January 22nd, 2023.
This post will tell you everything you need to know about the USPS rate changes over the years, why rates are increasing, how these increases differ from those seen in other digital marketing channels, and what all this means for the future of Programmatic Direct Mail.
On January 22nd, 2023, USPS will make a number of changes and updates to the First-Class Services and Priority Standards. These will include postage rate increases to all First-Class and Standard mail postage.
“As inflation and increased operating expenses continue, these price adjustments will help with the implementation of the Delivering for America plan, including a $40 billion investment in core Postal Service infrastructure over the next ten years. With the new prices, the Postal Service will continue to provide the lowest letter-mail postage rates in the industrialized world and offer a great value in shipping”
Overall, this would raise prices approximately 4.2 percent, which is lower than the Bureau Labor Statistics annual inflation rate of 7.9 percent at the time of the announcement.
- First-Class Postcards by 6%
- First-Class Letters by 3.25%
- Marketing Class Postcards and Letters by 3.5%
The USPS receives no direct taxpayer funding for its operations. Instead, it is primarily funded by revenue from postage sales. Over the past few decades, with declines in First-Class letters, increases in the volume of small parcel deliveries, and high demands for eCommerce, the USPS has struggled to maintain its service standards. The agency revealed it has not met “First-Class Mail service targets in eight years, which is due to both unattainable service standards and a lack of operational precision.”
Therefore, to overhaul USPS operations, it will implement cost-cutting tactics coupled with a new fee structure, including this current price increase for Market-Dominant mailing services. These rate changes align with the ten-year plan released in March 2021 by Postmaster General Louis DeJoy. It outlines how the agency will improve service standards and achieve financial sustainability.
While no one likes a price increase, these changes are necessary for the agency’s future financial solvency. Without these changes, the USPS anticipates net losses in excess of $160 billion over the next decade. However, these rate increases are projected to contribute about $40 billion for investments in technology and infrastructure and are designed to modernize and improve the USPS’s operations.
Does this mean I have to worry about Programmatic Direct Mail prices being as unpredictable as other digital marketing channels?
Nope. Overall, Programmatic Direct Mail pricing remains stable because postage rate increases are generally predictable, occur annually or semi-annually, and align with inflation. The Delivering for America plan has made those increases a bit more substantial than what was standard in the year prior, but the increases are announced far ahead of implementation, providing ample time for those impacted to prepare and make adjustments.
Postage rates are also regulated by a federal oversight agency. The Regulatory Commission is an independent agency providing transparency and accountability for the USPS. Composed of five Commissioners, they oversee rate changes, negotiated service agreements, classifications of new products, post office closings, amendments to international postal treaties and conventions, and other issues.
Conversely, other digital marketing channels lack transparency. Instead, they are subject to the whims of individual media owners, market demand, and other obscure factors. Without regulation, security, or oversight, pricing tends to be volatile, fluctuates drastically, and is overly complex. For marketers, this means direct mail has a massive advantage over all other digital marketing channels because, unlike digital media, Programmatic Direct Mail pricing is stable and transparent.
What does this mean for your brand’s Programmatic Direct Mail program with PebblePost?
PebblePost remains committed to minimizing the impact of any postal rate changes. We continue to offer our all-inclusive cost-per-piece pricing at the most competitive rates resulting in the highest performance for our brands, powered by our market-leading Programmatic Direct Mail® platform.
Additionally, we’re adding several new benefits to offset this change and ensure no material impact on your brand’s marketing performance.
As always, working with PebblePost means you have an entire team of experts at your disposal. In addition, your account team will schedule time with you over the coming weeks to talk through these opportunities in more detail so you are enabled to continue hitting your goals and driving profitable growth.
It is still early, and more details will arise, so rest assured PebblePost is on top of this and will continue to deliver updates and improve its services to ensure business continuity and your brand’s marketing success.
We know price changes can be complicated and frustrating. Fortunately, at PebblePost, our expertise and partnership with USPS mean we are well-equipped to help you navigate this change.
Plus, our programmatic direct mail experts and data science team are here to help you put together a comprehensive and high-performing Programmatic Direct Mail program to boost your marketing goals.
Now that you know everything about the USPS rate changes, you’re ready to continue expanding your brand’s reach with Programmatic Direct Mail.
Still, have questions?
Talk to us directly. We’d love to show you how to put Programmatic Direct Mail to work for your marketing program.
For Further Reading on the Subject
2021 USPS mid-year postage rate change summary from Pitney Bowes