Mark Vruno

How to Save on Standard Mail Rates
January 3, 2008

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Question: With the USPS's new shape-based rules, how can we save money on standard mail rates now?

Answer: For this answer, we turn to Bob Makofsky, GM of Conformer Expansion Products, an innovator of automation-friendly envelopes, mailers, presentation folders and portfolios. Makofsky spoke with direct-mail pro David Wilson, who has done his share of creative thinking since the USPS announced the shift to shape-based postage.

“We’ve had to deal with the reclassification of what constitutes a flat package,” says Wilson, a 30-year industry veteran and director of fulfillment at a company that does continuity mailings and other consumer orders. “The restrictions on flats caused more things to become parcels—the highest postage category.”

The Push for Efficiency
Under the new system, in effect since last May, all postage categories (e.g., first class, standard, etc.) have increased significantly in the flat and parcel classifications. The goal is to improve mail efficiency. Mail pieces that work with USPS automated processing machines qualify for the lowest rates, while those that require manual handling incur a steep surcharge. For example, converting a first-class flat to mail as a letter saves 39¢ per piece, and downsizing a first-class parcel to ship as a flat reduces postage by 33¢.

Makofsky adds that organizations like Wilson’s, which use standard mail, have even bigger incentives to use the most efficient packaging possible. In this category, pieces that ship as flats save 65¢ over parcels of the same weight and 55¢ compared to not-flat machinable (NFM) pieces—packages with the dimensions of a flat that don’t conform to new guidelines on uniform thickness or flexibility. 

The NFM category presents special challenges for nonprofits that send enclosures in their fund-raising campaigns and books or other literature. The recent reclassification increases postage on these types of mailings up to 400%. Many items that previously qualified for automation discounts now mail as NFMs or parcels. For a piece weighing less than 3.3 oz., the basic presorted rate of less than 24¢ per piece jumps to 90¢ as a non-discounted NMF and $1.00 if shipping as an irregular parcel.

Standard Mail Solutions
Five months after the new pricing system had gone into effect, Wilson’s company found two options to help cut standard mail costs:

1) Mailer downsizing. The best way to slash standard mail rates is to use the most efficient packaging possible. In this mail category, reducing weight doesn’t have as large an impact as it does for first-class mail: $0.046 per ounce compared to $0.17 per ounce. Modifying packaging, however, to downsize parcels or NFMs to flats eliminates the surcharges cited above. Wilson’s firm is exploring options to prevent product shifting and comply with the uniform thickness rule, as well as ways to address the flexibility requirement.

“The new guidelines demand greater creativity from both users and manufacturers,” says Marvin Makofsky, Conformer's president. “By working closely with customers and the U.S. Postal Service, we’ve developed envelopes that meet automation requirements and qualify for the most efficient postage rates.” Such collaborative efforts have resulted in mailers that allow nonprofits and other bulk mailers to ship items like CDs, calendars and boxes of greeting cards as flats, relieving the bite of the latest postage hike.

2) Mail consolidation. Working with a third-party service like FedEx SmartPost or UPS Mail Innovations can further reduce mailing costs. Wilson’s firm started using mail-consolidation services four years ago, before the USPS redesigned the postage structure. With shape-based pricing in effect, Wilson predicts six-figure savings this year alone. “The consolidator picks up our product, does the sorting and delivers it deep into the postal system,” he explains.

By combining high-volume mail from multiple organizations and using state-of-the-art sorting equipment, these vendors qualify for the deepest standard-mail discounts. In addition, consolidators can often decrease delivery times. “If we give a package to the postal service, delivery typically takes 10 to 14 days,” Wilson says. “Using a consolidator can cut delivery down to only six to eight days.”

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Posted by Mark Vruno on January 3, 2008 | Comments (1)