Junk Mailers Get a Postage Price Break. You Don't.

×

Junk Mailers Get a Postage Price Break. You Don't.I just checked my mailbox, and guess what I found buried there: Deep within the pile of credit card pre-approvals, Lands' End catalogs, and offers to refinance my mortgage at an affordable rate was my October issue of Postal Tales of the Absurd.

In this month's edition, we learn that over at the USPS, Postmaster General Patrick Donahoe has announced his latest initiative to save the post office from bankruptcy. (Hint: Improving customer service to attract more business isn't a part of it.)
As you may recall, in recent months the good Postmaster has suggested everything from postponing prepayments for worker health benefits, to closing hundreds of mail processing centers, to shutting down thousands of post offices as means to the end of heading off a predicted $20 billion annual loss in 2015.

Evidently, that's still not enough. So recognizing the need to raise revenue as well as control costs, Donahoe is going back to the default business plan at USPS, and hiking the cost of mailing a letter.

Here's a quick rundown of the changes -- straight from the USPS press release. Effective January 22, 2012, USPS will:

  • Add a penny to the price of delivering a one-ounce, first-class letter, to $0.45.
  • Raise the cost of sending a postcard by $0.03 -- a 10% hike to $0.32.
  • Raise most international rates $0.07, to $1.05...
  • ...but raise rates for Canada and Mexico delivery only $0.05, to $0.85.

Package delivery prices will also go up (a boon for FedEx (FDX) and UPS (UPS), which become more cost-competitive by comparison with USPS. So will rates for standard mail, periodicals, and a few other services.
In fact, only one postal service is actually getting cheaper: the cost of mailing jumbo-sized junk mail.

Mail Junk for the Bargain Low Price of ...

At the same time as Donahoe raises the price that ordinary postal customers like you and I must pay, advertisers and other business customers (commonly known as "junk mailers") are getting a price break.
Donahoe's new pricing plan calls for charging such bulk mailers nothing for the second ounce of any missive mailed at the first-class mail presort rate.

Now, as we learned earlier this month, USPS is taking other steps to "facilitate" bulk mailings, too. It's offering reduced rates for ad mail bearing "a special code that could be read by a smartphone." Other initiatives are said to facilitate bulk mailings, and offer junk mailers rates now as low as $0.14 a piece. Add it all up, and the USPS is clearly trying to convince small businesses to use USPS more often.

There's just one problem with that, however: It won't work.

Method to the Madness

If you read between the lines, there's actually some logic to Donahoe's plan to promote junk mail over "real" mail. In recent years, banks, utility companies, and other routine monthly mailers of bills-by-post have been encouraging their customers to "go paperless." And while saving trees surely warms the hearts of Sierra Club members, to the USPS, the whole plan sounds like a conspiracy to "go Post Office-less." The more customers agree to receive bills and account statements online, the fewer pieces of business mail floating through the postal system -- and the less revenue for USPS.

By offering junk mailers the chance to stuff an extra ounce of ads into their first-class postage, however, Donahoe hopes to make business customers rethink the cost advantages of virtual billing.

On the one hand, a paperless invoice saves the cost of printer paper, an envelope, and a stamp. On the other hand, it will now sacrifice the chance to market more material to customers free of charge.

Or Just Madness

Donahoe is offering junk mailers a carrot here. Will business customers bite? Perhaps some will. At the very least, companies that can't convince customers to go paperless will surely take the Postmaster up on his offer to stuff the envelopes they do have to mail out with an extra ounce of advertisements from their commercial partners.

So rejoice, consumer! Next year, you'll have even more opportunities to buy the latest collectibles from the Franklin Mint, genuine imitation leather wallets, and miniature LED flashlights free-of-charge (plus $5.99 shipping and handling).

On the other hand, I suspect most businesses will look at the 1.4% response rate to such offers and decide that $0.45 in stamp savings in the hand is worth $5.99 in the bush -- and then decline Donahoe's generous offer. And by raising the cost of a stamp needed to pay a bill by mail, the USPS has given consumers one more reason to respond to business mailings online.

Motley Fool contributor Rich Smith does not own shares of any companies named above. The Motley Fool owns shares of United Parcel Service and FedEx. Motley Fool newsletter services have recommended buying shares of FedEx.


Increase your money and finance knowledge from home

Introduction to Economic Indicators

Measure the performance of the economy.

View Course »

Investing Like Warren Buffett

Learn from one of the world's best investors.

View Course »

Add a Comment

*0 / 3000 Character Maximum

37 Comments

Filter by:
wassup?

didn't say internet was free-said u can send ecards etc., online for free-thus saving u $ in postage, gas & worry it didn't arrive in time and/or at all. i have aol(which i have gotten for free for many years-any members can request) & i have a package bundle through time warner 4 digital cable, landline phone & roadrunner. the roadrunner runs about $17 per month(2 yr price guarantee or more) which if u buy stamps monthly, make trips to the p.o., and/or have p.o. box in my opinion cost would be close & perhaps during holidays would run u more in stamps-my point was that in my opinion with the resources available to at least me the p.o. will need me long b4 i will need them!!! also sending online will give u peace of mind, save time & gas & can be in my pajamas!!! with peace of mind comes lower stess levels & bp & could save marriages-so now u have $ & don't have to go to Dr!!! u r welcome-lol-hagd

October 27 2011 at 1:00 PM Report abuse rate up rate down Reply
No way!

The answer to the postal problem is so obvious, it is also so easy.
Just as the article says (RAISE THE PRICE ON SENDING JUNK MAIL, ADVERTISEMENTS,ETC) It would save enormous amounts of money and HUGE FORESTS FULL OF TREES. ALSO GAS (SO MUCH NEEDED TO CARRY THOSE ENORMOUS LOADS OF MAIL). Not to mention the many huge trucks needed to carry it all around and the people and machinery needed to sort everything. IT IS THE ANSWER. Everyone I know throws out most of their mail before even leaving the mail room at my condo.

October 27 2011 at 9:16 AM Report abuse rate up rate down Reply
savemycountry911

I would love for the PO to raise rates on jusk mail. Why not? That is mostly what I get.

October 26 2011 at 9:47 PM Report abuse rate up rate down Reply
Michael Pagliaro

THIS DONAHUE IS DUMBER THAN POTTER. HOW DO SUCH GUYS ATTAIN SUCH LEVELS IN BUSINESS. I SEE LETTERS ALL THE TIME WITH AS LITTLE AS 7 CENTS POSTAGE. WE ARE LOSING TONS OF MONEY ON BULK RATES SUCH AS THESE. THEY CAN'T BE THIS STUPID. THE MAILERS WILL HAVE TO PAY THEIR FAIR SHARE FROM NOW ON. THEY HAVE NEVER PAID THEIR FAIR SHARE ALL THESE YEARS. THE PRE SORT DISCOUNT SHOULD BE ABOLISHED,NOW. WE ARE LOSING MONEY ON THIS TO. THIS DISCOUNT WORKED WELL IN THE LATE 80s BUT SINCE THE MACHINES DO ALL THE WORK NOW WE SHOULD NO LONGER OFFER PRE SORT DISCOUNTS. EVERY MONKEY IN AFRICA KNOWS THIS, MR POSTMASTER. YOU SHOULD SECURE A NEW JOB AS RINGMASTER IN RINGLING BROS,BARNUM BAILEY CIRCUS, PLEASE, PRETTY PLEASE!!!

October 26 2011 at 9:35 PM Report abuse +1 rate up rate down Reply
Bob Komar

ron and delores ,you my friends are TWO(2) MORONS!

October 26 2011 at 9:25 PM Report abuse rate up rate down Reply
hey good looking

LET'S SEE, GIVE LETTERS A DISCOUNT FOR PUTTING STANDARD MAIL IN WALK SEQUENCE. TAKE THAT MAIL AND RUN IT WITH FIVE DIGIT TO MIX IT WITH ALL OTHER MAIL FOR THE CARRIER. RUN FIRST AND SECOND PASS TO PUT IT BACK IN WALK SEQUENCE. WHY ARE WE GIVING THE DISCOUNT TO START WITH? HOW COULD THIS MAIL EVER PAY IT'S WAY? I ASK THAT QUESTION I AM WAITING FOR AN ANSWER. ANY MANAGERS OUT THERE?

October 26 2011 at 6:58 PM Report abuse rate up rate down Reply
parthenon1

"Junk Mail" as it is oftenly wrongly described, is in reality advertising. I prefer it to having half of the program time on TV taken us with commercials. Mailed advertising specialities can be read and asorbed more easily than a glance at a TV screen. More details can be presented that might make a product more of interest to me. Also this mail is very low cost to handle through the postal service since in order to get the better rates the sorting is already done the payment is already determined by the report form supplied by the Post Office. In fact Advertising Specialties pays more of the costs of moving all mail than first class mail.

Ok so the Post Office is losing money, its because it is a government agency and none of them ever saved a dime.
My suggestion on how to turn the handling of mail etc. profitable is to ask United Parcel and Federal Express to take over the responsibility of delivering and moving the mail. Yes it would eliminate the P.O. workers retirement program and union work rules. By asking UPS and FedEx to set up a joint plan that will give 6 day delivery of mail at the same or lower cost than it is today that would take another loser from the Fed Treasury and put it in the private sector where it would be better service for less cost.

October 26 2011 at 5:05 PM Report abuse rate up rate down Reply
mdunnjr

Is the Huffington Post nothing more than a negative force in the media? Nearly every article tells a story of unfairness to this one or that one. Truly getting digusting. The credibility of your reporting staff is losing me quickly. There is an article pointing out that people are feeling miserable--well this media source is doing nothing to help. Between the biased stories from here --the lack of leadership in DC--the games around a re-election--the claas warfare--theidiots marching on Wall Street-how can anyone at any level feel good about thngs.

One thing--we might not have an immigration problem soon--who in their right mind would want to come here. You get punished if you are successful--people make broad uneductaed comments about this and that--it is amazing.

October 26 2011 at 4:15 PM Report abuse +1 rate up rate down Reply
Ron & Dolores

Who needs the post office anymore, we sure don't, junk and bills, bills can be paid thru e-mail now, and no one needs junk mail, hope they go out of business, they cannot run the business to make in profitable anyways.

October 26 2011 at 4:13 PM Report abuse -1 rate up rate down Reply
frankfv8

don't like the junk mail i don't so I send it back so that they bill the sender , screw them thank U Andy Rooney 4 the tip

October 26 2011 at 2:56 PM Report abuse +3 rate up rate down Reply