How to cut postage costs in the wake of 6% postage increase Jan. 26
February 4, 2014
By Max Heath
Postal Chair | NNA
Biggest increase since 2007 imposed for 2 years
The newspaper industry is facing price increases three to four times inflation (more than 1.5 percent). It’s all the result of the U.S. Postal Service’s second attempt at an “exigent” increase. This time, the Postal Regulatory Commission granted the request, based on estimates of lost revenue from the recession only.
The 1.6 percent inflationary increase allowed by law was joined by the 4.3 percent exigent case, for an average 5.9 percent. But many price cells used by community newspapers go up 7 percent or more. Jan. 26 is the effective day.
Because the economy for newspapers and shoppers has yet to improve substantially in the wake of the 2008 Great Recession, many publishers will be seeking ways to save postage. Ironically, USPS and the PRC seem ignorant to the effect that many mailers will only reduce mailings to keep budgets stable. But Periodicals and shoppers, unless frequency is reduced, have little way to cut the number of mailings.
Tactics to trim the increase and save Periodicals postage
Convert distant mail subscriptions to electronic formats for those who will convert. Most newspapers have room to improve here. The National Newspaper Association worked hard for several years to get e-subs counted on PS Form 3526, Statement of Ownership. And this year we have a promise to finally get them on one combined form, rather than the 3526-X that existed the last two years.
Don’t try to convert subs within the county or trade area, as they generally support decent amounts of preprint dollars. But the distant subs without inserts get the worst service anyway.
Create FIRM bundles. When you have two or more papers mailed to the same delivery address, you can combine them in a bundle (separate from all other bundles) and pay only one piece price for the entire bundle, not for each piece in the bundle. Postage is determined by the “Addressed Pieces” column on the 3541 postage statement.
Outside-county at line C36 the price is 19.9 cents. Just two pieces in a bundle saves nearly $10 a year for weekly, $20 semiweekly, etc. up to $70 for a 7-day daily. Most newspapers mail multiple copies to their state press association, ad agencies, state agencies, etc.
In-county prices save the piece price “horizontally” at whatever level the piece is sorted to. Carrier-route sorted pieces save 6.7 cents each. It’s not uncommon to mail bundles of 10 or more pieces to nursing homes or remote schools for NIE copies. Nine pieces X .67 = more than $31 a year for a weekly. Do the math for your mailings and frequency. Your software vendor should have FIRM bundles enabled, but you may have to find the right check box to set it up. The key is making sure you enter the addresses exactly the same each time, and then you must train the mailroom to catch these bundles and actually make them up.
Increase DDU entry. In-county, the savings is 4.8 cents a pound and 0.8 per piece, thus increasing with weight. A 4 ounce paper saves 2 cents per copy, and 8 ounces yields 3.2 cents. Outside the county, the savings are based on zoned pound prices for advertising and non-advertising. A 4 ounce paper saves 4 cents per copy, and 8 ounces yields 5 cents. If you sell single copies in a town or village, and have carrier-route sorted copies, you should also drop those copies in unsacked bundles and claim the discount.
Create separate editions. If you mail preprints to distant states with no chance of benefiting the advertiser, or if omitting them but paying as if you did, you need to create one or more editions zoned for weight. Each different weight version is a separate “edition” for postal purposes, and can have its own 3541 just for the copies matching that weight. Check your software or call your vendor if you need help doing so.
Print on narrower web or lighter paper. Both cut pound price postage. (That’s even higher on Standard Mail shoppers than it is on Periodicals.) Most papers have mastered this, and have little wiggle room. But there are still a few holdouts on wide webs. Time has come to trim to save.
Tactics to trim the increase and save Standard Mail postage
Examine your PS Form 3602-R carefully. First, see if most of your pieces are DDU-entered and priced at the lines mentioned in the next graph. The difference is 5.5 cents between “None” Entry and DDU Entry. If you enter copies in an SCF (Sectional Center Facility) on Friday or Saturday, be aware that USPS has proposed to change delivery standards to four days to reduce carriers’ Monday workload to save money starting in March. That gives you another reason to increase DDU drops (which can be done in unsacked bundles).
Eliminate copies that fall outside Part F, Carrier-Route Flats, lines F19-23, for 3.3 ounces or less, or F58-61, for 3.3 ounces or more. Copies that don’t “code” to carrier-route because of imperfect address can fall to expensive 5-digit, 3-digit, or ADC prices costing 38.6, 47.2, or 52.4 cents per piece, respectively. It’s the same for copies you choose to mail outside your primary market to advertisers, ad agencies, etc. If you really must, go ahead, but be sure you understand the costs, and ensure that your list of those people is not outdated.
Check lines F22 and F62 for DDU Basic price copies. This price for 10-124 copies per route is a 5.2-cent premium over the High-Density price. You should check your non-subscriber list to ensure you haven’t missed potential addresses. Perhaps you need to get CDS (Computerized Delivery Sequence) qualified through your software vendor. Your goal should be to reach at least in the 125-up High-Density copies per route.
Check lines F20 and F60. The High-Density Plus price, for 300 pieces and up, actually decreases Jan. 26 for pieces 3.4 ounces or more. At 4 ounces, the price is 3.47 percent below 2013, and the percentage declines after that until becoming a tiny increase from 10-16 ounces. It is now in your interest to hit the 300-piece level if possible.
Full-coverage shoppers should achieve 90 percent active residential or 75 percent of total active addresses on lines F19 or F59. And these days, even many non-subscriber shoppers hit that level because of lower subscriber penetration.
Trim New Postal Costs
• Add Delivery Unit drops.
• Increase Standard mail pieces for High Density discount.
• Shift outside-market readers to e-subs.
See the chart on Page 16 showing the 2014 prices for Carrier-Route Standard Mail. DDU Saturation gets a 5 percent increase. High-Density is stuck with a stiff 7.4-6.1 percent decrease from 1-16 ounces. Basic price goes up 6.2-5.2 percent from 1-16 ounces. High-Density Plus prices are discussed above. This chart is different from the one run in November Pub Aux when the price increases were announced. My apologies for omitting the 4.3 percent exigent case from those projections.
Finally, one of the best ways to increase revenue with no additional cost is to add weight to your TMC packages to get closer to the 3.3-ounce minimum. Single-sheet flyer sales are the best method to add minimum weight to earn profitable prices. © Max Heath 2014
To see the postal charts, click here.
Max Heath, NNA postal chair, is a postal consultant for Athlon Media Group (American Profile, Relish, Spry and Athlon Sports magazine) and Landmark Community Newspapers, LLC. E-mail firstname.lastname@example.org.