USPS to introduce shape-based pricing

As part of its proposed May 2007 rate change, the United States Postal Service (USPS) will introduce Shape-Based Pricing, one of the most dramatic postage structure changes in years. The initiative is being implemented as a way for the USPS to better align postage rates with its mail processing costs, and its implications for mailers are expected to be two-fold. First, there will be a significant increase in postage costs for various types of mail pieces – in some cases 30% to 90%; and secondly, it could significantly change how a company processes its mail. In addition to the Shape-based Pricing initiative, traditional first class postage is expected to increase nearly 8 1/2% – to USD 0.42 up from USD 0.39.

When Shape-Based Pricing goes into effect, there is the potential for organizations unprepared for the new processing requirements to experience frustration and increased costs as they become accustomed to the numerous changes being introduced.

"Any new postal rate increase causes disruptions within organizations for a variety of reasons," says Hasler, Inc. President and CEO, John Vavra. "However, Shape-Based Pricing is going to require that companies plan for and structure their mail processing in an entirely different manner if they expect to minimize cost increases and possibly save money on some mailings."

Weight vs. Shape

Currently, the USPS primarily uses a weight-based method to determine postage costs for letters, flats and parcels. With mail processing costs rising, and with the need to encourage

customers to prepare mail in ways that increase efficiency for USPS processing methods, the Shape-Based Pricing initiative moves from a pure weight determination factor for postage costs to one that combines size, thickness and weight. Because of their shape differences, letters, flats and parcels will now all be priced differently, since each is handled and processed differently. Simply put, an item that is easier for the USPS to process will cost less than an item that is not. For example, if a letter is too thick or too large, it will need to be posted at the flat (large envelope) postage rate. And any mail piece that does not fit within the new guidelines for letter size or flat size will be considered a parcel, thus subject to significantly higher parcel prices. Having to calculate these rate differentials can be frustrating, time consuming and expensive.

Impact on Mailrooms

The effects of Shape-Based Pricing are expected to impact all mailers in a variety of ways. Small volume mailers will need to manually measure the size and thickness of letters and flats to ensure proper postage. Mid- to high-volume mailers, in order to keep the mail stream flowing efficiently, will need to utilize today's high-speed automated equipment to apply postage. However, no matter the size of the mailing operation, all mailers will now need to be aware of the size, thickness and weight of their mail pieces if they hope to minimize cost increases and maintain mail processing productivity.

Vavra strongly suggests that mailroom operators educate themselves regarding the new requirements and take advantage of ways to reduce costs. Some of these cost cutting steps include better planning and consolidating of mail pieces, and selecting the proper and most cost-effective envelope sizes to take advantage of smaller size cost reductions. Others include utilizing dynamic weighing platforms, efficient folder/inserters, address printers and other automated equipment, and presorting the mail to take advantage of significant USPS discounts.

"The price increases and the changes being introduced by the USPS will surely impact everyone," continues Vavra. "But they offer opportunities as well. It's more important than ever that mailroom operators work closely with their equipment suppliers in order to identify ways to better use their resources and organize their mailings to ensure increased productivity."

Hasler represents nearly a century of precision engineering and extraordinary quality in mailing machines. Hasler is well-known in North America for its broad line of mailing and shipping systems and mail support equipment, such as mailing machines, postage meters, folders/inserters, address printers, tabbers, mail sorting and tracking systems and mail center management tools. Hasler equipment and systems are supported by a continent-wide network of independent dealers providing sales, service, supplies and support to their customers. For more information on Hasler, visit www.haslerinc.com