This article originally appeared in the November/December, 2017 issue of
Mailing Systems Technology.
With the new year approaching, we are all anticipating a postage increase for January. With all the programs offered by the USPS, it can be daunting to know if you are capturing all the savings available. This guide will explore what options exist and where you can go to get more information. We are going to focus on the most applicable domestic savings options that should be easy to implement in your organization. For many of you this may be a review, but hopefully the structure will make it easy to find savings that can help reduce costs for the future.
Letters and Flats
Barcoding your Mailings – (Up to 80% Savings!)
Postage savings is the main reason most companies barcode their mailings (see the chart below). As the mail piece gets larger or the customer completes workshare steps, the savings can increase dramatically. Also, since 2016, the third ounce is free with all First-Class Mail (automation and presorted). This can allow mailers to add extra invoices or marketing information at no additional postage costs!
Mailers who are sending similar, non-personalized pieces can get bigger discounts using Marketing Mail. This is designed for a newsletter or a solicitation where every piece is the same and the customer can live with a slightly slower delivery. This compares to items like invoices, statements, and checks have to go First-Class Mail because every piece is slightly different or has personal information. Check out the Marketing Mail Eligibility test provided by the USPS to see what class your mailing qualifies.
Pros to barcoding:
- Saves you postage
- Cleans addresses prior to sending
- Keeps track of customer moves
- Processes mailings with automatic sorting and forms creation
- Faster delivery
- Software and hardware costs
- There are many steps to barcoding that require resources
- Taking mail to the USPS
- Keeping software up to date
Additional Ways to Reduce Costs with Barcoding:
Density – The more pieces you have going to a specific area, the better the rates.
Destination Entry Discounts – For Marketing Mail, you can get deeper discounts (up to $.044 per piece for letters (under 3.5 ounces) and up to $.208 for flats (over 4 ounces)) by delivering it to the Destination Delivery Unit (DDU), Destination Sectional Center (DSCF), or Destination Network Distribution Center (DNDC). This is great for mailers with a local mail list. Services are also available that can transport mail throughout the country to help you qualify.
Intelligent Mail Barcodes – For mailers using this barcode, there is an additional $.001 (Marketing Mail) and $.003 (First-Class Mail) discount that can be applied. This barcode offers a lot of value on top of the rate discounts (tracking of mail, free move updates, better reporting) that should be explored.
Presort Services – Many companies want the benefits of automation and barcodes but cannot cost-effectively manage it inside their operation. These providers have one or several sorters that are similar to what the USPS uses in their facilities. Presort providers work on a savings split arrangement with the customer and USPS.
USPS Promotions and Incentives – The USPS has a schedule of different promotions it offers to higher volume mailers, typically geared to using the latest technologies that can improve the value of mail. These promotions have limited time periods and require the client to be proactive in its management and refunds. (Editor’s note: Whether or not there will be promotions in 2018 remains to be seen)
Here are the minimum requirements to barcode your mailings:
- Pieces – At least 500 pieces for First-Class Mail or 200 pieces for Marketing Mail.
- Software – Need software that meets all USPS certifications.
- Permits – Need to have at least one permit from the USPS.
- Preparation – All mailings must have barcodes on each piece, be sorted, placed in trays with tray tags, have reports attached, and brought to the USPS for processing.
Folding your Flats
If you are sending out lightweight items in flat sized envelopes (9x12 or 10x13), you may be able to save by folding them in half into 6x9 envelopes or in thirds into #10s.
The savings is significant in four ways:
- The postage savings is huge because you are changing from a Flat to a Letter category.
- The envelope costs are much less expensive.
- The envelopes are lighter.
- If you barcode your mail or use a presort service, up to 3.5 ounces of mail can be processed at the one-ounce rate!
Parcels and Expedited Mail
Commercial Base and Commercial Plus– (Up to 42% Savings!)
There are additional discounts of up to 42% off the retail rates for mailers who submit their pieces through PC Postage or an electronic manifest with a permit imprint. These rates are available for Priority Mail, Priority Mail Express Mail, and First-Class Mail Package Service. It is important to note that up until January 24, 2015, you could get the Commercial Base rates through a postage meter, but the USPS is now requiring that these items be submitted electronically through one of the methods above so it can maintain full package-level detail on every item.
There are two different rate tiers and the savings are based on the package weight and zone:
Commercial Base– A six to 39% discount for single piece rates that you can get for all of your packages.
Commercial Plus- This is an additional three percent discount (over Commercial Base Rates) if the specific volumes are met. Priority Mail requires 5,000 at one time or 50,000 total pieces in the previous calendar year and a customer commitment agreement with USPS. To reach these Commercial Plus volumes, it can be for your combined usage across multiple locations.
Choose the Right Mailing Equipment to Maximize Discounts
The solution that you use to process the piece makes a big difference as you can see from the table below.
Here are the main areas of savings:
- The USPS has a reduced letter rate for organizations that use a Postage Meter or PC Postage. This savings is now $.03 per piece!
- PC Postage and some higher end postage meters will provide a way to use electronic Return Receipt (eRR) for your Certified Mail items that can save $1.30 per item.
- With PC Postage, you can qualify for Commercial vs. Retail First-Class Package Service that savings 12-50%.
- Priority Mail costs are reduced significantly (14% average across all weights and zones) by submitting through PC Postage and utilizing commercial rates.
It is important to note that many new postage meters are coming with a PC Postage tool to be able to utilize the rates above.
Additional Savings Ideas
1. Compare USPS Rates to the Private Carriers – USPS may be able to provide faster delivery (to specific zones) at lower costs for lightweight items (less than 10 pounds) and should be shopped regardless of your discount.
Here are the main reasons to use USPS:
- The private carriers typically have a base rate that they do not go below. When you take this rate, plus the additional fees for residential, delivery area surcharge, fuel surcharge, address corrections and Saturday delivery, USPS may be a bargain.
- The USPS has amazing rates on lightweight packages less than 16 ounces ($2.61-4.30 vs. most private carriers that start over $5.00). No one can typically come close to these rates, which is why the main e-tailers will typically send these items through the USPS. This is especially true now that USPS Tracking can be added for free!
- When comparing Ground and 3-Day service to USPS Priority Mail, many areas will get faster delivery.
- Packaging is free for Priority Mail with special rates for flat rate boxes.
2. Consider Media Mail, Library Rate, and Bound Printed Matter for printed material and DVDs. If you can live with the three- to-eight-day expected delivery time, these services may be a huge win. You can ship one pound starting at around $2.50 and 10 pounds starting at $3.42! You need to pay special attention to the type of material you are sending (as well as where it is going with Library Rate) to make sure it qualifies.
Hopefully this helps you find strategies to lower your mailing and shipping costs and combat any increases we may see with the new year.
Adam Lewenberg, CMDSS, MDC, President of Postal Advocate Inc., runs the largest provider of Mail Audit and Recovery services in the United States and Canada. They manage the biggest mail equipment fleet in the world and their mission is to help organizations with multi-locations reduce mail related expenses, recover lost postage funds, and simplify visibility and oversight. Since 2013, they have helped their clients save an average of 60% and over $34 million on equipment, avoidable fees, and lost postage. He can be reached at 617.372.6853 or email@example.com.