New Rules for USPS Rate Increases Means Bad News for Direct Marketers

The Postal Regulatory Commission has announced that the USPS’s current pricing system is not adequate to meet the goals of the 2006 postal law. This is bad news for direct marketers because it means postage rates will likely increase by more than the rate of inflation over the next five years.

While the PRC has proposed keeping the CPI cap in the USPS pricing system, it has also added a number of adjustments to the rules for regulating rates. These include:

  • new usps rates rulesAllowing the USPS to increase rates as much as two percentage points above the CPI for all mail for 5 years.
  • Allowing an additional one percentage point more if USPS achieves performance goals (.75 based on operational efficiency and .25 based on service).
  • For products not fully covering their attributable costs – the most prominent of which are Periodicals and Marketing Mail Flats – an additional two percentage points will be allowed.
  • A requirement that products with workshare discount pass-throughs significantly different than 100% must get into prescribed bands within 3 years: 75%-125% for Periodicals and 85%-115% for every other product.

There is a 90-day comment period on these proposed changes followed by 30 days for replying to any comments. The PRC Chairman, Robert Taub, has emphasized that none of the elements of the proposed pricing changes will go into effect until the process is fully complete. This likely means the changes would not take effect until late 2018 or 2019.

We’ll continue to monitor the issue and keep you informed.