On January 24th at midnight, the new 2021 postal rates will go into effect and, just like the daylight savings time adjustment, you may wake up in the morning a little dazed and confused about the cost to mail a letter. Not to worry – there is plenty of information available to you now through your mail partners and the USPS that will fine-tune your understanding of the upcoming 2021 postage increase.
Overall, the expected January 2021 postage rate increase is a typical CPI rate change that falls in line with the established Postal Accountability and Enhancement Act (PAEA) of 2006. Based on the CPI ending August 2020, ‘under 2%’ is the average benchmarked increase, with some categories experiencing 0% increase and others an 8% postage increase. The steepest postage increases apply to mail falling into one or more of the following categories:
- Non-automated
- Non-machinable
- Heavy
- Mixed ADC – no dropship
You’ve hit the trifecta if you’ve qualified in all of the above – and your reward is a 6-8% increase in postage costs. Once again, the USPS stays true to form and applies higher postage rate increases for the mail categories that are ‘under water’ – meaning the postage applied does not cover the expense of processing.
The key to reducing postage costs is simple for most of us:
- Keep it clean: update your addresses, NCOA, etc.
- Keep it letter size
- Automate your mail using an Intelligent Mail Barcode (IMB)
And before you read the following highlights of the January postal increase, please note there are rumblings of a 2nd USPS postage rate increase in 2021. Hold tight – we may have more information about this as early as December.
Highlights of the January 2021 increase:
- Single piece postage for first class stamped mail remains the same, at $0.55 each, but each additional ounce cost will now cost + $0.20 – an increase of $0.05 per piece. Say goodbye to the $0.70 cent butterfly.
- Postage for single piece metered first class mail continues to be cheaper than stamped postage, at $0.51 each (a $40/m savings).
- Non-profit flat mail under 4 ounces increases an average of 3.4% .
On the flip side, the USPS will continue to offer their Postal Promotions and Incentive programs in 2021 with a few adjustments, aka ‘read the fine print.’ These programs offer postal credits or lower postage costs for participation/compliance. A few of the promotions may be out of reach for many, but there are at least two incentives that everyone can participate in:
- 2020 Earned Value Promotion: New participants receive a postage credit of $0.02 per each BRM (Business Reply Mail) and CRE (Courtesy Reply Mail). Repeat participants will need to exceed previous year thresholds before a postage credit is earned/applied.
- 2020 Informed Delivery Promotion: Offers a 2% discount on postage for business mailers who use Informed Delivery interactive campaigns with their physical mailpieces to reach and engage customers.
It’s really quite easy to qualify for the mail categories that have the lowest postage rates if you do your homework upfront. Technically, the easier it is for the USPS to get our mail to its final destination, the cheaper the postage should be.