Guide to the 2007 Postage Rate Changes

U.S. Postal rate changes in 2007 come with a twist. The latest changes to postal rates will actually reduce costs on some types of business mailings — if you play your cards right. Postal rate changes this time around are more like a rate shakeup that's sure to cause confusion, but also creates opportunities for business mailers of all sizes.

For most consumers, the postal rate change merely means a 2-cent (5%) bump to 41 cents for a first-class stamp. But the "additional ounce" rate will drop to just 17 cents from 24 cents for letters up to 3.5 ounces. Thus, a two-oz. first-class letter will cost just 58 cents, down from 63 cents today, making first-class mailings over an ounce cheaper than today's! In another major move, the U.S. Postal Service (USPS) is shifting to "shape differentiation." It means this: While current postal rates are based on weight, the new postage rate system sets different rates for different shapes — such as letters, flats (large-size envelopes) and packages. Here's what you need to know about the new postal rates:

1) Light-weight parcels will be hardest hit, with the one-ounce rate more than doubling, from 52 cents to $1.13 for a 1-oz. parcel (20 cents per additional oz.).

2) If a parcel is reconfigured as a flat (which can be up to 0.75 inches thick), you'll save as much as 38 cents per piece.  And if the contents of a flat are folded into a letter-size envelope, you'll save as much as 20 cents each under the new postal rate system.

3) You can save money by sending more in a single mailing rather than multiple mailings. So bulk it up, but stay under 3.5 ounces. Above that, your piece will be hammered with higher pricing as a "flat."

4) Postcards are headed to 26 cents from 24 cents.

Bottom line for business mailers: The new complex and far-reaching postal rate rules raise costs in many areas, but also create money-saving opportunities that you can turn to your advantage.

Action Steps
The best contacts and resources to help you get it done

Seize your savings with full postal rate change details

The latest changes represent a sweeping overhaul of the postal rate system in the U.S. that will drastically change mailing habits for many businesses. Not understanding the new rules can cost you plenty.

I recommend: Mail meter giant Pitney Bowes (PB) has an excellent set of free, highly detailed guides to the 2007 changes with suggestions on how to turn them into money-saving opportunities. Their Rate Change Central website has a wide range of helpful information and advice. PB's Practical Guide to the 2007 USPS Proposed Rate Change (PDF) is definitely worth a look, and includes detailed specs on new letter and flat dimensions and rates. USPS also has a good rate change FAQ and side-by-side comparison charts of old and new rates. Meter leader Neopost also offers rate-change details and solutions.

Get savvy about shape-based postal pricing

The new buzz word at the P.O. is "shape-based pricing." It's not how good you look standing in line, but rather how machine-friendly your mailings look to the USPS.

I recommend: PB's primer on shape based P.O. pricing is a great start. Check out the new rules on flats, as well as postcard guidelines and see how your business can save.

Crush the high cost of returned mail

The P.O. wants to reduce "Undeliverable As Addressed" (UAA) mail, so it's radically reducing the cost of sending you address corrections. Paper-based updates are dropping from 75 cents to 50 cents, and e-updates from 21 cents to just 6 cents.

I recommend: Save serious money by cleaning up your mailing lists.  Get details on price reductions for address correction services (ACS). Mail management software can also help.

Save money on marketing mailings with new USPS rates

Businesses that already send a high volume of two and three-ounce letters will see a drop in overall postage expenses. Others can benefit by adding contents to existing mailings.

I recommend: Promote your products and services by adding inserts, brochures and cross-sell materials to statements and invoices. Check these strategies for making maximum use of first-class mail under new postal rates.

Put the latest mailing machine technology to work

Shape-based pricing changes everything. One solution is new technology that not only checks mailpiece weight, but also the length, width and thickness to calculate the right postage under the new rules.

I recommend: Take a look at the new "Weight-on-the-Way" line of mailing machines being introduced by Pitney Bowes.

Get your package priorities straight

The new rates and dimension-weight requirements raise the cost of oversized Priority Mail parcels

I recommend: If your business sends parcels of any kind via the USPS, this is must-know information on the new shape pricing.

Avoid future increases with the new Forever Stamp

The revised postal rate structure includes a new "Forever Stamp" that will continue to be worth the price of a First-Cass one-ounce letter even if that price changes in the future.

I recommend: The USPS plans to make the Forever Stamp available in "reasonably limited quantities," although just what that means hasn't yet been determined. Details will be available at the USPS website.

Tips & Tactics
Helpful advice for making the most of this Guide

• Since the rate for flats at some weights will rise as much as 30 percent, you'll want to convert those to letter size mailings whenever possible. But you still have flexibility. "Letter" dimensions include sizes up to 6 1/8 inches high and 11 1/2 inches in length, which can accommodate papers with a single fold.
• Use your transactional mail for marketing purposes.
• Increase the number of inserts. If you are already including inserts, consider adding more. But be careful: once you exceed 3.5 ounces for letter mail, your piece will be classified as a flat, which will increase your cost.
• Combine multiple communications into a single envelope. If you are planning to send a customer notice or reminder, save money by combining it with another mailing such as a statement.
• If you have customers receiving two or more statements monthly, consolidating those to a single envelope can reduce costs dramatically under the new rate structure.
• The flat-rate box experiment will be made permanent. The new flat-rate box, regardless of weight, contents or distance traveled, will cost $8.80.
• Savings for pre-sorting your mail before handing it over to the Post Office will become even larger than before.