Marketers and businesses alike were not expecting to see a second postage rate increase this year after the annual raise took effect at the start of the year. On July 19, 2021, the Postal Regulatory Commission (PRC) approved a second postal rate change effective August 29, 2021. The price change overall raises Market Dominant product and service prices by approximately 6.9 percent.
When postage rates increase, Darwill goes out of our way to look at how our clients will be affected. We help clients explore their options to mitigate and manage these costs with our various data-driven smart marketing solutions.
As a marketer, here’s what you need to know about the United States Postal Service (USPS) postage increase as it effects your marketing mail.
Postage rate increases are occurring due to the postmaster general’s “Delivering for America” 10-year plan. This plan was created to offset the declining revenue the USPS is experiencing and to get them on the road to achieve financial sustainability and provide excellent service.
View the PRC price adjustment order here.
The Postal Accountability and Enhancement Act (PAEA) of 2006 capped price increases for mailing services at the Consumer Price Index (CPI). The PAEA also required the PRC to evaluate the price cap system 10 years after the date of enactment and to modify or replace the system if it was not meeting the objectives of the law. The PRC recognized the price cap was a barrier to the Postal Service’s financial sustainability in December 2017, resulting in cumulative lost gross revenue opportunity of $55 billion. In May, the Postal Service reported a net loss of $82 million for the second quarter of 2021.
In November 2020, the PRC announced new rules on market-dominant prices, allowing above Consumer Price Index (CPI) price increases based on certain factors and allowing the Postal Service more flexibility in establishing prices for mailing services.
Darwill takes the time to discuss the effects of the postage change with our clients and to find solutions that will reduce costs elsewhere. While many clients may need to adjust their budgets to cover the additional postage amounts–there are other options to explore to mitigate excess cost.
Despite the rise in costs, there is still time for marketers to combat higher rates in 2021 by registering for USPS promotions. View the USPS’ full list of promotions and incentives. Below are the upcoming registration deadlines for each promotion.
If you would like to discuss how to mitigate costs related to the postage rate increase, contact your Darwill account executive today.