Postal Costs

All business owners have postal costs, no matter how small or technologically savvy the business. From the occasional letter or invoice to large regular shipments, businesses continue to have paper-based interaction with the market and with government institutions, although electronic communications are increasing in various and ever more sophisticated forms. The U.S. Postal Service remains the primary institution which handles communications on paper and provides a variety of services for businesses and individuals—and is the low-cost service provider.

IN GENERAL

Postal Service pricing changes from time to time to reflect costs incurred by the service. The most recent change became effective January 8, 2006. Rates are classified as "retail" and as "discount." The first category usually applies to single-piece mailings and the second to mass mailings with various additional criteria potentially deepening the discount. The USPS rate structure is complex enough so that even representative examples require a lot of space to reproduce. A single first-class letter weight at or under an ounce costs 39 cents; parcel post weighing one pound or less costs $2.96 per package if it can be processed by machine or $4.58 if it must be hand-processed; both rates are for local delivery, higher if destined to other zones. Priority mail will minimally run $4.50 for a one-pound or lighter-weight item. And express-mail will minimally run $10.95 to $14.40 for the first half pound. These rates increase as the weight of packages increase. Mass mailings are discounted; for example, a letter of lowest weight, mailed as part of a commercial mailing, will cost 18 cents versus 39 cents (17 cents for nonprofits). In all cases, the USPS rates are lower than those charged by private delivery services. The USPS provides a 38-page rate book online (see references) and also provides an online, interactive method of determining mailing costs.

CATEGORIES

Express Mail Service. The Postal Service's most competitive alternative to other private delivery services, such as FedEx and UPS, is Express Mail. This service provides next-day delivery by 12 p.m. to most destinations, even on weekends and holidays. Express Mail costs several dollars less than those of the large private delivery services, making it the best option for frequent large shipments under 70 lbs., if cost is the only consideration. The cost for Express Mail is scaled up to 70 lbs., so business owners needing to send heavier packages for quick delivery should check with their local post office for details on larger shipments.

Priority Mail. Priority Mail is similar to Express Mail and, provides two-day service to most domestic destinations. If an item can wait for two days to be delivered, this is the least expensive option. Again, this alternative is less expensive than those offered by privately owned delivery companies. Both Priority Mail and Express Mail rates end at 70 lbs. and packages must measure 108 inches or less in combined length and girth.

Standard Mail (A) and First-Class. Standard Mail (A) is the primary option used by retailers, catalogers, and other advertisers to promote products and services. Items must weigh less than 1 lb. to qualify under this designation. Although the charge per ounce on the single-piece rate is the same as First-Class mail, Standard Mail (A) bulk mailings (i.e., not single pieces) can, if presorted by ZIP Code, save money. Pre-sorting saves the post office some processing time and the payoff for the mailer is a reduced rate. However, if the bulk mailing contains errors, found by random-sample checking by the postal staff, the charge increases. Then the mailer has the option of correcting the errors or paying the additional fee. Standard Mail (B) is the same system but it is applied to packages weighing more than 1 lb.

First-Class, on the other hand, allows the mailer the option of simply dropping mail into any mail drop box, provided it already has the correct amount of postage on each piece. Also, First-Class mail is the generally used option for post cards, regular mail such as bills or letters, and similar single items.

Postage Meters. Personal postal metering has long been an option for businesses that make heavy use of the mail system. It allows the user to pre-stamp his/her mailings according to precise weight while still at their business location. The convenience of this item has made it perennially popular with many small business owners. According to many experts, however, electronic postal metering is the wave of the future. Electronic postal metering (sometimes referred to as E-postage) enables customers to download postage over the Internet.

SAVING ON POSTAL EXPENSES

Direct marketers, periodical publishers, and other companies that make heavy use of the postal service for basic business operations can reduce expenses significantly by sorting direct mail or packages by zip code, assembling mail into sorted and pre-labeled bags, and by delivering the mail to designated drop-off sites. So-called letter shops are in business to provide all types of mailing services to business, including stuffing and addressing letters from sorted address lists with zip coding in conformity with postal regulations. Methods of minimizing mailing costs include the following points cited by mailing advisors:

• Regularly update customer mailing address data to eliminate outdated information and reduce unproductive mailings.
• Take advantage of reduced rates for drop shipments. The U.S. Postal Service offers discounts for mail delivered to them further down its distribution pipeline. Destination discounts can be realized by dropping off mail at bulk mail centers (BMCs), sectional center facilities (SCFs), or destination delivery units (DDUs).
• Lighten weight of packages. All postage costs—for both domestic and international destinations—are based in part on weight. For bulk mailings, then, reductions in weight can produce big savings. Easy ways of doing so range from reducing the stock of letters and order forms that are being mailed to culling the number of pages in newsletters, correspondence, and other materials.

see also Mailing Lists

BIBLIOGRAPHY

United States Postal Service. "Mailing & Shipping Guidelines for Business. Available from http://www.usps.com/business/mailingshippingguidelines/welcome.htm. Retrieved on 29 April 2006.

United States Postal Service. "Rates and Fees." Available from http://pe.usps.com/text/dmm300/ratesandfees.htm#wp5906266. Retrieved on 28 April 2006.

                                 Hillstrom, Northern Lights

                                  updated by Magee, ECDI