2012 CPI-based Price Increase Takes Effect this Weekend
Don’t forget that the Postal Service’s 2012 price change takes effect this Sunday, January 22. Unlike past years, the Postal Service is adjusting prices for both Market Dominant and Competitive products at the same time, which means the Market Dominant increase is falling three months earlier than it did last year. (Market Dominant products include First-Class and Standard Mail, while Competitive products are largely expedited services and parcels.)
The average overall increase for Market Dominant products is about 2.1%. Increases for automation-compatible letter mail are close to the average, while increases for flats and parcels are generally higher than the overall average. Charts of the most common prices used by marketers are available here.
Other notable features of the price change include:
- Discounts for Destination Entry (Standard Mail) and Full-Service Intelligent Mail (Standard and First-Class) remain unchanged.
- Automation and presort First-Class letters qualify for “second ounce free” pricing, with no additional ounce charge until the piece reaches two ounces. However, second ounce free does not apply to flats or single-piece letters.
- The Postal Service will waive annual permit fees ($190) when 90% of the mail volume processed through that permit meets Full-Service standards.
Will There be an Exigent Price Increase?
The request for an exigent price increase first filed by the Postal Service in July 2010 seems to have finally run its course, and we don’t expect an exigent increase in 2012.
Although the Postal Regulatory Commission (PRC) rejected the initial request, the Postal Service appealed the ruling to the Court of Appeals. The Court remanded the case back to the PRC for a clearer definition of what is required to document the need for additional funds is “due to” the unexpected circumstances cited as the cause of the shortfall. When the PRC provided that definition, the Postal Service filed a response indicating that it wanted to pursue the case and asked the PRC to keep the case open indefinitely until postal reform measures currently under consideration in Congress could be acted upon. The PRC response to that request essentially requires the Postal Service to resubmit the entire case if it is to move forward. The Postmaster General has indicated that he does not intend to submit additional information to the PRC.
While the Postal Service could revive this case, postal industry observers do not expect them to do so, nor is it expected that the Postal Service will file a new exigent request this year.
Paying Postage with Credit?
You may have seen recent headlines in industry news sources, such as “Direct mailers no longer need to prepay postage,” in reference to a recent PRC ruling that allows the Postal Service to enter into Negotiated Service Agreements (NSAs) with customers regarding alternative postage payment methods. While the headlines are literally true, they are a bit premature.
The PRC ruling simply confirmed the Postal Service’s right to enter into such agreements and approved, in concept, a template agreement on which the Postal Service can base client-specific NSAs. Each individual NSA must be negotiated separately with the Postal Service, and in the past, NSAs for Market Dominant products (such as First-Class and Standard Mail) have taken one to two years to negotiate. While the approval of a template document may speed negotiation of NSAs related to alternative payment methods, the Postal Service has yet to provide guidance to mailers regarding how they want to approach these agreements and what the specific process will be to create such an agreement.
IWCO Direct continues to monitor developments related to this opportunity. Be sure to check back often as we keep you informed of the latest issues related to the Postal Service and their impact on direct mail.
– Kurt Ruppel
Marketing Services Manager
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