NEW DOMESTIC AND INTERNATIONAL PRICES

The Governors of the U.S. Postal Service voted March 19 to accept the Postal Regulatory Commission's (PRC) recommendation to increase domestic postage rates and fees. The price changes will happen May 14. International Mail categories and postage rates and fees are changing at the same time new domestic postage rates and fees are implemented. A description and highlights of the International Mail changes begin on page 13.

The domestic price changes call for a 2-cent increase in the price of a First-Class Mail stamp and introduce the 41-cent Forever Stamp. After its initial release, the Forever Stamp will be sold at the First-Class Mail single-piece 1-ounce letter rate in effect on the day of purchase. The postage value of a Forever Stamp will always be the First-Class Mail single-piece 1-ounce letter rate in effect on the day of use. Additional postage would have to be affixed to letters weighing more than 1 ounce, letters subject to the nonmachinable surcharge, or mailpieces subject to another rate of postage (e.g., large envelopes or packages).

The new prices reflect changes in operations and the marketplace and will enhance efficiency, offer more choices and make sure all types of mail cover their costs. We include incentives to create mailpieces compatible with our processing systems and to deposit flats and parcels closer to where they are delivered.

One of the overriding principles in the new price structure is that shape matters. It’s important to us because the cost of handling each mail shape — letters, large envelopes (flats) and packages — varies widely. Shape is also important to you because it affects how you position your message or your product.

The new price structure will create a more efficient mail system so that the total overall cost of using the mail is kept as low as possible. Many of the changes come under the familiar heading of worksharing but we’re taking it a few steps further. We’re adding new sorting options to reduce the number of containers in all mailings, and we're extending scheme bundle and sack preparations to give mailers access to lower rates and to better align flats mail preparation with mail processing. We want to make using the mail a great value and reduce the costs associated with the handling of undeliverable-as-addressed mail by incorporating bold initiatives that make it easier and cheaper for mailers to get updated addresses.

Here are highlights of the most frequently used products:

First-Class Mail

The shape of the mailpiece will play a major role in the prices you pay for First-Class Mail. Letters, large envelopes (flats) and packages (parcels) are no longer the same price based on weight. The new price structure recognizes that each of these mail shapes has substantially different processing costs so each mail shape will now have separate prices.

The single-piece 1-ounce letter rate will increase 2 cents to 41 cents and the single-piece postcard rate also increases 2 cents, to 26 cents. The single-piece 1-ounce rate for flats (such as large envelopes) will be 80 cents and the single-piece rate for packages will be $1.13 for the first ounce. The additional ounce rate for all single-piece letters, flats and packages decreases to 17 cents.

Letters weighing 1 ounce or less that do not meet aspect ratio standards, or have any other nonmachinable characteristics, continue to be subject to the nonmachinable surcharge, which increases to 17 cents. Letters that weigh more than 3.5 ounces, or exceed one or more of the maximum letter dimensions, regardless of weight, are subject to the rates for flats. Similarly, mailpieces that exceed any one of the dimensions for a flat will be subject to the rates for packages. The weight limit for flats and parcels remains 13 ounces.

Another feature of pricing based on shape is a reduction in the additional ounce rate. As shape becomes more important in determining the price, less emphasis is placed on weight. With the additional ounce rate decreasing to 17 cents for all shapes, this results in lower prices for letters weighing over 1 ounce and large envelopes weighing over 6 ounces.

If the contents intended for a large envelope can be folded and placed into a letter-size envelope, the mailer can save 39 cents on the first ounce. On the other hand, a mailer may determine that using a large envelope will enhance the perceived value of the enclosed message to the addressee and choose to pay the higher price. Likewise, some items traditionally prepared and mailed as a package may be reconfigured and placed in a large (expansion) envelope, saving the mailer 33 cents on the first ounce (additional ounces are 17 cents each). When mailers choose to mail more efficient shapes, our costs are lower and the savings can be passed on to the mailers through lower prices. The mailer has a choice as to the value of the shape of the mailpiece, versus the cost of preparing and mailing it.

Similar changes apply to the pricing for workshare mail as well. The additional ounce rate for presort-rate letters, flats, parcels and automation-rate flats is 17 cents. The additional ounce rate for automation letters is 12.5 cents. These reductions, along with pricing based on shape, eliminate the need for the "heavy

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