After May 14, businesses in every sector will experience sticker shock as shape-based postage rates take a bite out of their bottom lines. But few, if any, will be harder hit than the direct marketing industry.
Fortunately, the Postal Regulatory Commission is reconsidering the proposed rate increases for flats – enacting the U.S. Postal Service recommendations “under protest.” In the meantime, the industry must work within the new system to reduce the financial sting of shape-based pricing.
Executive education. Several variables determine mail piece classification and, ultimately, postage. To manage postage costs, executives need to understand the basics of the new system, including weight limits by class, thickness limits by class, uniform thickness and flexibility guidelines.
Total costs. Consider every aspect of a mailing for an accurate cost comparison. For instance, an envelope that converts a parcel into a flat may cost 5 cents more but save 39 cents in postage.
Usage analysis. Monitor how mailing supplies are used. Some departments mail letters and statements as flats because of aesthetic appeal. After May 14, that preference will cost 39 cents more per piece.
Likewise, the thickness of padded mailers – often more than 0.75 inches – classifies them as parcels under the new system, reducing their cost savings over boxes. On May 14, mailing a six-ounce book as a parcel will cost $1.95, a 25 percent increase over today’s rate of $1.59. Using a flexible paperboard mailer converts the package into a flat, reducing postage to $1.65.
Efficient packaging. Some mailers inherently cost more to process. Boxes, for example, automatically ship as parcels and require higher fulfillment costs for assembly and packing. New thickness rules make padded mailers poor substitutes. Using automation-friendly mailers, like paperboard envelopes, can lower fulfillment and postage costs.
Mail downsizing. For flat mailings weighing 3.5 ounces or less, businesses can save 39 cents per piece by folding the contents to fit a 6 inch by 9.5 inch envelope. Converting parcels to flats, up to 13 ounces, produces similar savings.
Right-sized mailers. New USPS rates include guidelines for uniform thickness to promote machinability. These rules discourage the use of oversized mailers for smaller items. Mailrooms need to use more efficient packaging instead of stockpiling a standard large mailer and filling in the void. Some envelope designs accommodate a greater range of capacities. While these envelopes may incur a higher purchase price, they can save money overall through lower postage and warehousing costs.
Marketing design. When creating a direct-mail piece, a digest-sized format can lower campaign costs versus a letter-sized brochure. Mailing the smaller size as a three-ounce letter costs 75 cents versus $1.14 for a flat. This saves $39,000 on a mailing of 100,000.
Shape-based postage heralds a new era for the DM industry. It’s a challenge that requires innovative solutions to take advantage of efficiency incentives. Options that have been raised – and rejected – merit a second look. Previous arguments may lose weight when facing postage increases of up to 60 percent.