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Stamping out pain of postal rate hikes
Users turn to Forever stamps, business incentives to cut cost
Friday, May 09, 2008

The price of mailing a First-Class letter goes up a lick to 42 cents on Monday, one of a host of postal rate increases that will affect casual and power users alike.

For some, coping has been a painless matter of loading up on 41-cent Forever stamps, which represent valid postage no matter what the future may hold.

The Forever stamp, which also goes up to 42 cents on Monday, has become one of the U.S. Postal Service's all-time greatest hits, up there with the Elvis Presley and Love stamps. Americans have gobbled up 6 billion of them since their debut in April 2007.

The pace has accelerated in recent weeks to 60 million a day, postal officials said, as the anxiety over rate-hike Monday crept closer.

Postal Service officials came up with the fixed-price idea in 2006 after exploring how similar products fared in other countries, including Canada.

"We knew the Forever stamp would be a big hit with our customers, and we continue to replenish our stock to meet demand," said Postal Service Consumer Advocate Delores Killette.

Not all of the rate changes are as easy to follow -- or swallow -- as far as Pittsburgh Technology Council's Jonathan Kersting is concerned.

Last year's increases resulted in a 25 percent jump in the cost of mailing the organization's TEQ magazine, he said, much of it because the council lost use of a 501c(3) nonprofit permit.

While the council's 501c(6) status as a business league exempts it from IRS taxes, he explained, it means nothing as far as the Postal Service is concerned.

"The last increase hit us pretty hard," said Mr. Kersting, associate publisher and marketing director. "All I know is that our mailing costs went up significantly enough to make us re-evaluate who I'm sending the magazine to.

"We kind of really scrubbed our list to make it as clean as possible," he said, paring the list from 15,000 to 11,500. TEQ also is now posted online.

As its name implies, the council relies more on e-mail and the Web than the U.S. Postal Service; still, it sends out about 25 percent of its communications the old-fashioned way.

Mr. Kersting isn't sure how much the increase will hurt this time, though he might be relieved to hear that the rates affecting periodicals are rising less than the overall average of 2.9 percent.

A 2006 law allows the Postal Service to more easily raise rates, so long as they are tied to the annual Consumer Price Index. Future adjustments will probably occur in May, too.

Figuring out how a particular user will be affected is no simple feat. The new price schedule comprises 37 pages of charts, not including an additional dozen or so that detail international rates.

Be it First Class or standard junk mail, per-item costs are based on a maze of factors including size, weight and delivery volume, plus others that only experts can understand -- multibar-code densities, Enhanced Carrier Route classification, what kind of distribution facility is required and whether the item fits through a sorting machine.

If this sounds devilish enough to warrant a run on "Direct Mail for Dummies," keep in mind that the Postal Service doesn't stock that particular title. But it does offer a free, Mail 101 class with tips on getting a grip on droop tests, seam placement and the kinetic coefficient of friction.

Someone who doesn't need a lesson is Robert J. Croce, director of government relations for Valassis, a Windsor, Conn.-based giant in the marketing services industry. Through its direct-mail Red Plum brand, Valassis reaches about 100 million shoppers weekly with deals from Pizza Hut, Quaker Oats and 15,000 other advertisers.

Nobody likes rate increases, but Mr. Croce said Valassis has worked with the Postal Service on ways to make them incentive-based: The more work the marketer shoulders on his own, the cheaper the rate.

By tying the increases to the CPI, he said, "the new system does give a company like Valassis some predictability. It's going up but it's not going to be like oil, where one year you're going to have a 40 percent increase."

As for deals, Postal Service officials say there are plenty.

The Postal Service has switched to zoned service so distance now matters -- a one-pound Express Mail package from Pittsburgh to Philadelphia now costs $19 instead of the old flat-rate of $19.50, while the same shipment to Monroeville goes down to $14.55.

Using online postage for expedited shipments also helps, as will folding a flat piece into a standard envelope.

"The whole idea behind that is by reshaping to the smaller size it's easier for us to process, so we can pass it along to our customers in lower prices," Postal Service spokesman David Parteinheimer said.

David Guo can be reached at dguo@post-gazette.com or 412-263-1413.
First published on May 9, 2008 at 12:39 pm
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