For those of us who have been following USPS® postage rates for years, 2021 brought an unusual event: two postage price increases in one year. First, in January 2021, the price of some Mailing Services products went up. Then, bigger changes rolled out in August 2021: price changes to what the Postal Service® calls its “market dominant” products and services, including First-Class Mail®. It’s unusual for the cost of postage to go up twice in one year, and so the changes have prompted some questions. Here’s what you need to know.
The changes that went into effect on January 24, 2021, included adjustments to the price of First-Class Mail and Priority Mail®. The single-piece letter additional ounce price increased from 15 cents to 20 cents, the metered mail 1-ounce price increased from 50 cents to 51 cents, and the price of a postcard stamp increased from 35 cents to 36 cents. Priority Mail rates, including rates for flat-rate boxes and envelopes, rose by about 3.5%, but there was no change to the price of Forever® stamps at that time.
The mid-year changes that went into effect on August 29, 2021, did include a change to the price of a basic postage stamp, and so of course these changes received much more media coverage. Retail stamps and Forever stamps increased from 55 cents to 58 cents. Metered Mail letters increased from 51 cents to 53 cents (now a savings of 5 cents per letter compared to stamps). Flats increased from 1 dollar to $1.16 for 1 ounce, and postcards increased from 36 cents to 40 cents. Overall, the increase in price for these market dominant products was about 6.9%.
We just saw an expected temporary rate adjustment for the 2021 peak holiday season, which will affect prices on commercial and retail domestic competitive parcels, but that change will only be in effect through December 26, 2021. After that, experts don’t expect to see a permanent rate increase in January 2022, as the USPS enacted two increases in 2021. What’s more likely is that we’ll see an announcement about any planned rate changes in the spring, and they’ll go into effect in late summer 2022.
This year, the USPS published a 10-year plan called Delivering for America. The goal of the plan is for the Postal Service to achieve “financial sustainability and service excellence.” Changes in the way life and business are conducted in the U.S. have led to declining mail volume, and the Postal Service has recorded $87 billion in financial losses over the last 14 years. This plan aims to turn those losses around through, in part, new postage rates and a more rational pricing approach, which will help to keep the Postal Service competitive while providing the agency with needed revenue.
It’s important to note that even with the recent postage rate increases, USPS prices remain among the world’s most affordable, with some of the lowest letter-mail postage rates in the industrialized world. But according to the Postal Service, these changes will help them not only avoid projected future losses but also upgrade their processing equipment and make capital investments in their vehicle fleet and technology in order to improve their standard of service — and provide consistent on-time delivery.
The USPS handles nearly half of global mail volume, delivering to more than 160 million addresses across the country. And that number is growing; the service is actually adding close to 1,000,000 new delivery points every year. What’s more, the agency is focused on accommodating the rise in ecommerce; over the next 10 years, they plan to add 165,000 new trucks designed to handle the rise in package deliveries while lowering the greenhouse gas emissions of the USPS fleet by adopting cleaner technologies.
Of course, knowing the grand plan and the USPS’s strategic vision are helpful, but how do you keep postage price increases from negatively impacting your bottom line in the short-term? We’re already seeing many of our customers flock toward smaller mailers like postcards in order to find cost savings while still maintaining ROI on their end-of-year campaigns. In some cases, these customers have even seen their ROI improve as they experiment with new mail formats and sizes.
No matter the size of your budget, as the new year approaches, it’s important to plan your direct mail campaigns to maximize the results you get for your spend. If you’re not sure where to start, use our Direct Mail ROI Calculator to determine an appropriate budget to achieve your marketing objectives. And if you still have questions, we’re here to help!