Yesterday U.S. postal rates for first-class stamps rose a penny, or 1.9 percent.

Mailing a first-class letter, up to one ounce, will now cost $0.50 instead of $0.49. Metered letters are now $0.47 each, instead of $0.46, and postcards rose from $0.34 to $0.35.

The U.S. Postal Service recommended these new rates to the Postal Regulatory Commission, an independent federal agency, in October. The PRC approved them in November.

The U.S. Postal Service also raised shipping rates with Priority Mail services 3.9 percent and Priority Mail retail 0.8 percent.

USPS said mailing service price increases are limited based on the Consumer Price Index, however, shipping services are priced strategically, based on the market and the need to offer affordable services to consumers. For digital subscription companies like Hulu, Netflix and Spotify, these rate increases won’t pose a significant financial burden. For others, like subscription box companies and magazine and newspaper publishers who mail their products to subscribers, these are costly increases.

But wait, there’s more. The PRC has proposed rule changes to how postal rates are set that could mean price increases higher than 50 percent for periodicals over a five-year period.

On December 1, the PRC issued its findings to a mandatory 10-year review of the postal rate system. The goal of the review, required by the Postal Accountability and Enhancement Act, was to determine if the current ratemaking system ensures the postal system’s financial health while maintaining high quality service standards and performance. PRC essentially found that the system had maintained the postal service’s short-term health, but not its medium- or long-term financial sustainability, nor has it maintained high quality service standards. In other words, changes are coming.

Key proposals by PRC would give the USPS more latitude in establishing rates, in addition to the CPI cap which already exists. On top of the CPI, which averages about 1 percent per year, the USPS can raise rates an additional 2 percent for all classes of mail. In addition to that increase, the USPS can raise rates an additional 2 percent each year for periodicals, and if the USPS hits targets for efficiency and on-time delivery, it has the authority to raise rates another 1 percent.

An analysis by SIIA senior director of public policy David LeDuc said, if this proposal is approved, periodicals could see price increases over 50 percent over the next five years. In an email to members, LeDuc asked members for input on the proposed changes to postal rate setting by Friday, January 26.

‘The PRC is providing an opportunity for comments before announcing a financial decision, due by March 1, 2018. In preparation for our comments opposing this proposal, SIIA needs to hear from members about the impact of significant rate increases on periodicals mailers,’ LeDuc said.

PRC is accepting comments by March 1. Those who want to make comments directly to the PRC can do so online at PRC.gov.

In reaction to the postal rate increase, Target Marketing magazine made suggestions for marketers to make the most of their postal spending in an article, ‘USPS Prices Go Up on Sunday‘ by Heather Fletcher.

• For lower postage rates, keep letters to a minimum of 3 ½” high by 5″ long and a maximum of 6″ high by 10 ½” long.
• Make sure the address and barcode block on letter size mail fits into the USPS OCR read area.
• Tri-folded self-mailers must be addressed on the center panel to quality for discounted automation postage.
• The weight of a folded self-mailer should be under 1 ounce.

Insider Take:

The newest postal rates themselves are not significant, but the shipping service increases are, particularly for subscription box companies and the publishers of periodicals utilizing the U.S. Postal Service as their carrier of choice. While the new pricing might help the USPS attain long-term financial sustainability, they are likely to lose out to carriers with more competitive pricing.

The bigger issue, of course, is the proposed rate setting changes which could be significant to publishers of periodicals. To sustain such cost increases, publishers will have to make some tough business decisions – some they are already grappling with – like reducing the number of issues, reducing the size of their publication, passing on cost increases to subscribers, etc. We encourage consumers and subscription companies alike to contact the PRC with their concerns by March 1.