January 24, 2021 USPS Rate Increase: See How It Will Impact Your Budget

From Mailing Systems Technology Jan. 18, 2021

By Adam Lewenberg

For the past 21 years, I have been creating comparison charts for our clients that go over the changes in rates to show how it will affect budgets. The reason that I do this is that when the USPS talks about a 1.8% increase in Mailing Services and a 3.5% increase in Priority Mail, this is overall. Based on the type of mail you send, the increase could be higher or lower. You need to look at the class, weight, zone, density, and special services required to see the true impact. Also, when you look at the new rate charts provided by the USPS, they typically will not show the level of detail needed (previous and new rates, side by side) to see these differences.

The remainder of this article will look at the main classes of mail to break down the specific increases and decreases. Hopefully, this will help you budget by seeing the impact of the most common services that you use today. At the bottom of this article, there is also a link to an excel tool where you can plug in your mail volumes to see the impact to your organization.

First-Class Mail Single Piece – 0% – 13.8% Increase

The price of a stamp will stay the same for the first ounce, but the additional ounce rate is increasing from $.15 to $.20. This will make heavier letters significantly more expensive. Metered Letters are seeing a $.01 increase to $.51 and will have the same additional ounce increase. Flats are staying flat and will not go up.

First-Class Mail Commercial – 0% – 8.1% Increase

Automation letters are seeing a 2.1-2.5% increase while the Presorted rate is staying the same. Flats are having a large spike at 7-8% where Post Cards are in the 3% range.

The biggest change in this category occurred a few years ago when they increased the weight limit for the Commercial Letter rates to 3.5 ounces. The goal was to increase the value of the mail piece allowing customers to add additional content at the same price.

When you look at the chart above and compare the rates of a 3-ounce Metered Letter at $0.91 to a Commercial rate at $0.398, it is a 51% savings! This is a big win for presort services that are now more valuable because of the savings they can provide. Also, for flats (9 x 12 or 10 x 13) consider folding those into 6×9 envelopes. The savings can be significant with these new rates and weight savings. A 3oz. flat at $1.40 now could cost as little as $0.398 at the letter rate, assuming it could be automated through in-house software or presort services.

Marketing Mail (Formerly called Standard Mail) – 0% to 9.1% Increase

Marketing Mail Letter rates are increasing at approximately 0-3% while Flats are going up at 7-9%. They are holding Letter rates for all but the lowest sort levels. If you were taking advantage of destination entry discounts, the Letter rate savings is decreasing by 0-8% where with Flats, it is increasing by an amazing 44-61%, as you can see from the table below.

Priority Mail– 1% to 25% Increase (Depending on Weight and Zone)

Priority Mail is the most popular package service for the USPS. It covers items weighing 13 ounces to 70 lbs. and delivers in one to three days throughout the US. The rates are based on the weight and nine zones, which are determined by the distance you are shipping the item. They also have two different rate categories based on the type of customer:

Highlights

Priority Mail Express– 0% to 8% Increase (Depending on Weight and Zone)

Priority MailExpress highlights:

First-Class Mail Package Service–4% to 10% Increase

In the less than one pound market, the USPS has a complete monopoly, and you can see that it is rethinking why it is providing some of the discounts in this segment. The private carrier rates all start at one pound, where the USPS goes to the ounce. Think about the companies sending light parts that can be sent for around $3 with the USPS vs. the private carriers, which could charge two to three times that amount. We are seeing the largest increases in this segment with retail rates going up 4-6% and commercial rates increasing 5-10%. The biggest change was in 2018, when the USPS moved from flat rates to zone-based rates. This means items will get more expensive the farther away they are being sent. This drastically affects mailers who send across country.

Additional Rate Change Items

Conclusion

To budget for this increase, you need to look at the type of items you are sending, and the weight and zones that are most common, to truly estimate the impact. We have developed a Microsoft Excel-based budget calculator that you can download for free that should help you better plan for this year. Some of the most popular USPS classes are going up at the highest rates but luckily there are ways to help mitigate this through automation and technology.