Many of America’s small- and medium-sized business owners still depend on the United States Postal Service to handle their inbound and outbound mail and package deliveries. The USPS is a cheaper alternative to commercial carriers like FedEx and UPS. According to Forbes, “a 2019 report found that 70 percent of microbusinesses (fewer than 10 employees) had utilized the USPS within the previous six months”.
Additionally, the worldwide pandemic that began in 2020 put an even larger demand on the USPS as consumers opted for home-delivered goods versus shopping in brick-and-mortar stores. Changes to the government’s business model for the USPS have been many over the past few years. The postal workforce has been significantly reduced, postal service days and service hours in many communities have been shortened, and expected delivery dates for first class mail have been lengthened.
The price of a postal stamp has also seen many increases over the years, and coming soon, consumers can expect another USPS price increase in 2021.
About the USPS Rate Increase
Why does the USPS keep raising the price of a stamp?
There are many reasons why the USPS has steadily increased the price to mail a letter or package in US and abroad. But, postage price changes 2021 have a different reason than those of the past. Here are some of the main reasons why the USPS has to increase the price of mailing first class or priority mail:
- to keep up with inflation
- to compete with other carriers
- to pay for infrastructure upgrades
- yearly expenses exceeding revenue
- to remain financially self-sufficient
Remaining self-sufficient is likely the most pressing demand of the USPS. The postal service is designed to not operate on federal funds, but on self-generated revenue. It is the business model of the USPS that has garnered the most criticism – as it is thought to be inefficient, top-heavy, and lacking in employee incentives and morale.
USPS price increase 2021
Many consumers may balk at another round of stamp price increases. On August 29, 2021, in addition to facing longer mail delivery times, consumers can expect a postage increase that has been approved by the Postal Regulatory Commission (PRC). In essence, the price of a first-class stamp will increase from 55 cents to 58 cents. According to Postmaster Louis DeJoy, the increase is needed to offset billions of dollars in losses and to hopefully put the agency on the path to profitability.
What makes this price hike most distasteful for consumers is that part of DeJoy’s plan includes slower delivery milestones, estimating that 4 out of 10 pieces of mail would take two additional days to reach their recipients. Other USPS planned price increases that kick in during August include:
- First-Class Metered Mail Letters (1 oz.) – from 51 cents to 53 cents
- First-Class Mail Domestic Postcards – from 36 cents to 40 cents
- First-Class Mail Single-Piece Flats (1 oz.) – from $1.00 to $1.10
- Outbound International Letters (1 oz.) – from $1.20 to $1.30
To alleviate the rising costs, the experts at Ballantine recommend commingling. Commingling is a process by which mailings from more than one company are combined to meet USPS discount minimums for quantity for mailings to targeted neighborhoods.
- 70 percent of small business owners depend on USPS deliveries each month as a cheaper option.
- Remaining self-sufficient is likely the most pressing demand of the USPS for the price increase.
- Congress and the President of the United States are questioning the new business model offered by Postmaster DeJoy.
If you are a small business owner, contact Ballantine to discover how commingling and informed delivery can help keep your operations competitive and profitable.