Rate Increase for Direct Mail
August 17, 2010Recently, The U.S. Postal Service proposed increasing the prices to help close a projected $7 billion budget shortfall in the 2011 Fiscal Year. Under this proposal, the cost of a first-class stamps increases from 42 cents to 46 cents. Periodicals will see an 8% increase, catalog rates will jump 5.1% and standard mail will see a 23% boost. These proposed increases will go in effect January 2, 2011.
Obviously this isn’t good news for direct mail. Accordingly, the Direct Marketing Association released the following response to the rate increase:
Washington, DC, July 26, 2010 — The Direct Marketing Association (DMA) and the DMA Nonprofit Federation (DMANF) today asked the Postal Regulatory Commission (PRC) to dismiss the United States Postal Service’s (USPS) request to increase postal rates by ten times the rate permissible by law. The petition was filed by the Affordable Mail Alliance, of which the Direct Marketing Association, DMA Nonprofit Federation, and MFSA are supporting members. The Affordable Mail Alliance’s members are commercial and nonprofit organizations. Commercial mail accounts for 85 percent of the Postal Service’s revenues.
The Postal Service seeks to raise prices by an average of 5.6 percent — more than ten times the current rate of inflation — claiming as “exigent” circumstances the recession of 2008-2009 and electronic diversion of First-class mail.
“Businesses across the country have had to make difficult decisions due to the recent recession – tightening their belts, increasing productivity and in some cases, cutting their workforces as their revenue fell by 20 percent or more,” said Jerry Cerasale, DMA’s senior vice president of government affairs. “Because of this highly efficient management, many of those same businesses – including UPS and FedEx – have managed to return to profitability within a quarter or two. The Postal Service has not taken the same difficult steps. Instead, its unit costs rose by six percent in 2009 as prices fell across the economy. The Service has a lot more work to do to bring their costs under control before turning to its customers for yet another rate increase.”
For more information about the proposed rate hike and planning for your 2011 budgets speak with a representative from JLH, a Division of Complemar.
