# Presentation: 182522

## Shaping a More Efficient Future

**Price Change Proposal**

**Mailers’ Technical Advisory Committee **

***Stephen M. Kearney***
*Vice President*
*Pricing & Classification*
*May 17, 2006*

## High-Level Goals

**Growth**
**Efficiency**
**Cost coverage**
**Addressing**
**Positioning for the future**

## High-Level Initiatives

**Shape-based pricing**
**Less emphasis on weight**
**Incentives**
**Containers**
**Drop shipping**
**Sorting**
**Packaging**
**More choices**
**Forever Stamp**
**Low-cost Address Change Service**

## Agenda

**Review full product line**
**Strategy**
**Significant changes**
**Specific examples**
**Timeline to 2007**
**Questions**

## First-Class Mail

- Strategy

**Shape-based pricing schedules**
**Letters**
**Flats**
**Parcels**
**De-emphasize weight**

## First-Class Mail

- Significant Changes

**Forever Stamp**
**Single-piece 39****¢**** ****►42¢**
**Postcards 24¢ ****►27¢**
**Additional ounce 24¢ ****►20¢**
**Letters over 1 ounce go down**
**Flats over 6 ounces go down**
**Similar pattern for workshare**
**New Business Parcel category**

## First-Class Mail

- Examples

| Weight | Current | Proposed |
| --- | --- | --- |
| 1 ounce | 39¢ | 42¢ |
| 2 ounce | 63¢ | 62¢ |
| 3 ounce | 87¢ | 82¢ |

**Letters**

| Weight | Current | Proposed |
| --- | --- | --- |
| 1 ounce | 52¢ | 62¢ |
| 7 ounce | $1.83 | $1.82 |
| 13 ounce | $3.27 | $3.02 |

**Flats**

| Weight | Current | Proposed |
| --- | --- | --- |
| 1 ounce | 52¢ | $1.00 |
| 7 ounce | $1.83 | $2.20 |
| 13 ounce | $3.27 | $3.40 |

**Parcels**

## First-Class Mail

- Examples

| Item | Current Price | Proposed Price | Opportunity | Proposed Price with Modification |
| --- | --- | --- | --- | --- |
| 6 oz. parcel | $1.59 | $2.00 | Reconfigure as a flat | $1.62 |
| 2 oz. flat | $0.63 | $0.82 | Reconfigure as a letter | $0.62 |

- + 19¢

- + 3¢

- + 41¢

- - 1¢

## Priority Mail

- Strategy

**Cover costs**
**Especially large lightweight items**
**De-emphasize weight for         heavier items**
**Continue to improve convenience**

## Priority Mail

- Significant Changes

**Dimensional weight pricing for Zones 5-8 **
**Lower prices for heavier items**
**Permanent Flat Rate Box**** **

## Priority Mail

- Examples

| Item | Current | Proposed |
| --- | --- | --- |
| Flat Rate Envelope | $4.05 | $4.65 |
| Flat Rate Box | 8.10 | 8.80 |
| 12-pound (Chicago to Los Angeles) | 19.80 | 22.85 |
| 25-pound (Chicago to Los Angeles) | 36.85 | 31.05 |

## Priority Mail

- Examples

| Item | Current Price | Proposed Price | Opportunity | Proposed Price with Modification |
| --- | --- | --- | --- | --- |
| Zone 8, 10 pound, 1.6 cubic foot parcel | $20.25 | $28.75 | Reduce size by 25% to 1.2 cubic feet | $24.85 |

**+ **$8.50

**+ **$4.60

## Express Mail

- Strategy

**Low-cost alternative for shipping documents**

- Significant Change
**New 1-pound price**

## Express Mail

- Examples

| Price change examples | Current | Proposed |
| --- | --- | --- |
| Up to 1/2 Pound & Flat Rate Envelope | $14.40 | $16.25 |
| Over 1/2 Pound, up to 1 Pound | 18.80 | 19.50 |
| Over 1 Pound, up to 2 Pounds | 18.80 | 21.40 |

## Standard Mail

- Strategy

**Align pricing with operations**
**Encourage growth of efficient, effective mail**
**Expand shape-based pricing**

## Standard Mail

- Significant Changes

**Increase drop ship incentives**
**Add more presort options**
**Create distinct prices for parcels**
**Add “Not Flat-Machinable” category**
**Discontinue destination delivery unit rate for letters**
**Differentiate prices for detached address labels**

## Standard Mail

- Examples

| Item | Current | Proposed |
| --- | --- | --- |
| Advertising letter (3-digit auto, DBMC) | 19.2¢ | 20.7¢ |
| Non-machinable letter (3-digit, DBMC) | 30.3¢ | 39.5¢ |
| Catalog (3-ounces, 3-digit auto, DBMC) | 25.3¢ | 30.0¢ |
| Catalog (3-ounces, 5-digit auto, DBMC) | 25.3¢ | 27.2¢ |
| Catalog (8-ounces, 5-digit auto, DBMC) | 44.1¢ | 44.9¢ |
| Catalog (8-ounces, 5-digit auto, DSCF) | 42.8¢ | 43.3¢ |

## Standard Mail

- Examples

| Item | Current Price | Proposed Price | Opportunity | Proposed Price with Modification |
| --- | --- | --- | --- | --- |
| 8 oz. parcel, basic presort, no            drop ship | 82.4¢ | $1.301 | Enter at destination BMC | $1.101 |
| 12 oz. parcel          3/5-digit presort, DSCF | 85.3¢ | 93.9¢ | Enter at DDU,   5-digit presort | 80.1¢ |
| 4 oz. rigid auto flat, 5-digit presort, DSCF | 27.5¢ | 49.1¢ | Use auto-compatible flexible packaging | 29.1¢ |

- +47.7¢

- +27.7¢

- +8.6¢

- - 4.2¢

- +18.7¢

- +1.6¢

## Periodicals

- Strategy

**Encourage efficiency**
**Containers**
**Drop ship**
**Simplify co-palletization rules**

## Periodicals

- Significant Changes

**New 85****¢ container charge**
**Enhanced drop ship incentives**
**Particularly for high-editorial content**

## Periodicals

- Examples

| Item | Current | Proposed |
| --- | --- | --- |
| Weekly news magazine 
(6 oz., 40% adv., CR-RT, SCF, 2000-piece pallet)  | 17.9¢ | 20.0¢ |
| Opinion journal                                                                (5 oz., 10% adv., 3-digit, zone 4, 50-piece sack)  | 29.5¢ | 33.6¢ |
| Local Newspaper (4 oz., DDU, CR-RT) | 8.5¢ | 10.5¢ |

## Periodicals

- Examples

| Item | Current Price | Proposed Price | Opportunity | Proposed Price with Modification |
| --- | --- | --- | --- | --- |
| 8 oz., 5-digit auto, mailed  in sacks (40 pieces per sack) | 33.4¢ | 38.1¢ | Co-palletize with another magazine (1639  pieces per pallet) | 36.1¢ |
|  |  |  | As above, but entered at DADC | 31.2¢ |

- + 4.7¢

- + 2.7¢

- - 2.2¢

## Package Services

- Strategy

**More efficiency**
**Streamline product offering**

## Package Services

- Significant Changes

**Discontinue retail Bound Printed Matter **
**Lower increase for DDU and DSCF entry**
**Require barcodes on all Parcel Select items**

## Package Services

- Examples

| Price change examples | Current | Proposed |
| --- | --- | --- |
| 1-Pound Parcel Post  | $3.95 | $4.55 |
| 5-Pound Parcel Post (Chicago to Los Angeles) | $9.11 | $9.45 |
| 5-Pound Parcel Select DDU | $1.51 | $1.67 |
| 15-pound Parcel Select DSCF | $3.27 | $3.88 |
| 1.5-Pound BPM flat DSCF presort | 73.1¢ | 72.8¢ |
| 5-Pound BPM parcel DBMC presorted & barcoded | $1.298 | $1.516 |

## Special Services

- Strategy

**Improve address quality**
**Modernize services**

- Significant Changes
**New low-cost One Code Address Change Service for letters **
**Redesign Insurance**
**Reduce electronic Return            Receipt fee**

## Special Services

- Examples

| One Code ACS fees | Current | Proposed |
| --- | --- | --- |
| Automated First-Class Mail (letters only)  |  |  |
|     First two notices, each | N/A | 0¢ |
|    Additional notices, each | N/A | 5¢ |
| Automated Standard Mail (letters only)  |  |  |
|    First two notices, each | N/A | 2¢ |
|    Additional notices, each | N/A | 15¢ |

## Special Services

- Examples

| ACS fees | Current | Proposed |
| --- | --- | --- |
| Electronic ACS notifications (First-Class Mail)  | 21¢ | 6¢ |
| Electronic ACS notifications (other classes) | 21¢ | 25¢ |
| Manual (paper) notifications (all classes)  | 75¢ | 50¢ |

## Special Services

- Examples

| Item | Current | Proposed |
| --- | --- | --- |
| Certified Mail | $2.40 | $2.65 |
| Express Mail Insurance ($100 to $200) | $1.05 | 75¢ |
| Return Receipt (paper copy) | $1.85 | $2.15 |
| Return Receipt (electronic) | $1.35 | 85¢ |

## Timeline

**2006 ** **                                                   2007**
- May      Jun      July      Aug      Sep      Oct      Nov      Dec      Jan      Feb      Mar       Apr      May     Jun

**Governors Decision**
**(March/April)**

**Implementation**
**(May/June)**

**PRC Recommendation**
**(Early March)**** **

**Litigation**
**(May through March 2007)**

**Filing Date**
**(May 3, 2006)**

**10 Months**

**1 Year**

## Questions?

- Thank You
**Questions?**