Postal rates may soon go up again

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Dear Dan: Our marketing plans call for stepping up our use of direct mail this year, and we also use the mail for a variety of packages and flats. I heard that rates will be changing soon. Do you have details? – Small Biz Mailer

Dear Small Biz Mailer: It’s not official yet, but the U.S. Postal Service has proposed a broad set of postal rate changes that would take effect this spring – probably after May 1.
For most folks, it will simply mean a three-cent bump in the price of a first-class stamp, from 39 to 42 cents. But for small-business mailers, the changes represent a sweeping overhaul of the postage rate structure that will change the way many businesses use the mail system.
In some cases, in fact, rates will actually be reduced. If the changes are approved by an independent commission in coming weeks, the “additional ounce” rate will drop to 20 cents from 24 cents. Thus, for first-class mailings over an ounce, the new rates will be lower.
But the shakeup doesn’t stop there. There will be another big move to what the USPS calls “shape differentiation.” Current rates are based on weight. But the new system sets different rates for different shapes, such as letters, flats (large-size envelopes) and packages.
If the contents of a flat are folded into a letter-size envelope, for example, you’ll save as much as 20 cents each. And if a parcel is reconfigured as a flat (which can be up to 0.75 inches thick), you’d save as much as 38 cents per piece. Those savings will be huge on large mailings.
Lightweight parcels are hardest-hit by the proposed rate increases, with the one-ounce rate nearly doubling. Look for a 48-cent increase, from 52 cents to $1.00 for a one-ounce parcel, and 20 cents for each additional ounce. Postcards would go from 24 cents to 27 cents.
The bottom line for business mailers is this: When the new postal rate structure goes into effect later this year, it will create money-saving opportunities that you can turn to your advantage. Here are some other changes awaiting the final okay:
USPS wants to reduce the price it charges for address corrections for undeliverable mail, from 75 to 50 cents each for paper-based updates, and from 21 to 6 cents for electronic ones.
The savings for pre-sorting your mail will become even larger.
The flat-rate box experiment will be made permanent, with a rate of $8.80 regardless of weight, contents or distance traveled.
Pitney Bowes has an excellent set of free practical guides to the 2007 rate increases with details and suggestions on how to turn them into money-saving opportunities. Visit www.pb.com and click on Rate Change Central on the right side.

Daniel Kehrer can be reached at editor@business.com.

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