WHAT DOES THIS MEAN?
Under this proposal, postal rates would increase across the board with a postcard increasing from 36 cents to 40 cents, standard one ounce letter from 55 cents to 58 cents, and international letter from $1.20 to $1.30. The new rates are expected to take effect in approximately 90 days, so you could see this change as early as late August or the beginning of September.
WHY THE INCREASE?
In 2006, the Postal Accountability and Enhance Act (PAEA) was enacted which mandated that postal rates could not increase faster than inflation rates. This was to ensure overall stable postal rates. The PAEA also called for the Postal Regulatory Commission (PRC) to conduct a 10-year review on the regulation’s effectiveness.
It’s no secret that the USPS has been billions of dollars in debt for years, and the pandemic only exacerbated it. In looking at the PAEA’s effectiveness, the PRC concluded that the regulation—in particular its postal rates limit mandate—resulted in the USPS’ money woes. Due to this, the PRC proposed a new regulation to give the USPS the authority to set postal rates. This was adopted in December 2020 and implemented in January 2021.
Under this new regulation, the USPS can continue to have the authority to increase postal rates, which is exactly what is happening now and what can continue to happen for years to come.
WILL THIS PROPOSAL BE PASSED?
Likely, yes. The PRC is aiming to have the new postal rates adopted in August and be in effect come September.
HOW DOES THIS IMPACT YOU?
In the direct response marketing world, the USPS is a vital channel for organizations, committees, and campaigns to share their message with supporters. With many organizations still reeling from the impact of the pandemic, this increase of postal rates—and likely future increases—will only cause more financial struggles whether it be by increased postage costs, fewer donors and therefore less revenue, or all of the above.
WHAT CAN YOU DO?
There are three things you can do now:
- Work with your agency to research and test package formats and USPS promotions that can help you save costs.
- Spend time planning to carefully set your direct mail budget and assess, segment, and analyze your contact list.
- Continue to keep up with any USPS news so you can prepare accordingly.
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