When is Straight First Class Postage Not $.46 per Piece?
Answer: when the piece is considered “Residual First Class Mail”.
It should not be a surprise if you have never heard of it. It has been in effect for a year and a half, and we did not learn about it until yesterday; and we are in the Direct Mail business.
One of the biggest changes in the postal rate case of January 2012 (that continues today) was having a two ounce piece of Presorted First Class mail be the same rate as one ounce (it should be noted that this applies only to presorted mail). Up until that point, two ounces of First Class Mail was $.23 per piece more (currently $.20 more per piece) than one ounce. It looked like a big win for the postal customer, but as with most things surrounding the United States Postal Service, there was a catch built in.
When presorting a First Class mailing, anything that does not zip+4 and can not be sorted falls to what was once called the “single piece” rate, which not surprisingly was the same as the straight First Class postage. With the one and two ounce rates being the same, the postal service decided that it needed to do something different for these pieces that did not sort. After all, the single piece rate for a two ounce piece would go from about $.41 to $.66 per piece. On the other hand, they could not just use the one ounce rate since the piece was two ounces.
So you guessed it; USPS created the “Residual First Class Mail” classification, which at this time (August 2013) is $.48 per piece. On the surface, it still looks like a great deal for the postal customer; $.48 versus $.66 per piece for a two ounce piece. Ah, but here’s the catch…
The $.48 per piece rate is also charged to “one” ounce pieces of mail, which is two cents more than straight First Class postage ($.46 per piece). And while I am sure that the change was made to make it more economical for “transaction” pieces to be in your bills, I still believe there are an overwhelming higher percentage of one ounce pieces being presorted than two.
Now, before you stop presorting your First Class mailing on some high moral ground, the overall savings of presorting your mail makes it well worth doing, even with this classification built in. The percentage of the pieces that fall into this classification in most mailing is usually very small, so the savings of presorting your First Class mail far out weighs any “extra” benefit the postal service may receive for one ounce “Residual First Class” mail.
We wanted to bring this to your attention for two reasons. First, we wanted you to know what a “Residual First Class” classification is so you are not surprised like my client was when they read their postage statement. It was their “complaint” that started me into finding out more about it (we need to give full credit for this “research” to our data manager, Laurie who was already up on it).
Second, we wanted you to be aware that when the Postal Service does something that looks good for the postal customer, more often than not there is a catch. Unfortunately, if you are not aware, you could think you are saving money, when really there are other options that might save even more. This specifically applies to EDDM mailings, which we discuss in detail, in an upcoming post.
If you have any questions about this or anything else related to mailing, please feel free to contact us (see below).
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