Shape-based postage pricing

On May 14, 2007, the United States Postal Service (USPS) implemented a rate and structure change to combat rising processing costs. In addition to increasing their current postage rates, the USPS unveiled a major structural change to the way postage values are determined for mail pieces. This alteration, dubbed Shape-Based Pricing, represents a significant shift in USPS policy and has far-ranging implications for the mailing industry.

Current vs. Proposed Rates

Prior to May 14, 2007, the USPS primarily used a weight-based method to determine postage costs for letters, flats or parcels. With rising mail processing costs and a desire to encourage customers to prepare mail in ways that increase efficiency for their processing capabilities, the USPS assessed their operation, identifying the items that both add and reduce costs, and built their Shaped-Based Pricing structure accordingly, thereby introducing a rate change for different mail types and classes.

Shape-Based Pricing

Instead of using an item’s weight as the primary factor to establish shipping costs, a size, thickness and weight combination will now become the standard. Essentially, mail items that are easier for the USPS to process will be rated lower than items that are not. Because of their shape differences, letters, flats and parcels will now all be priced differently because each is handled and processed differently. The [http://www.usps.com/ratecase/ proposed Shape-Based Pricing structure] will significantly increase postage costs for various types of mailing applications. It also means there are going to be changes to how mail is processed.

Shape-Based Pricing is a form of dimensional weight. It promotes the use of easily sorted postal flats as well as high-density packages. On the other hand, it penalizes shippers of larger, lightweight packages.

The effects of Shape-Based Pricing will impact all mailers to one degree or another. Just how much will be determined by the type and volume of mail pieces sent. Small volume mailers will need to manually measure the size and thickness of their letters and flats to ensure proper postage is applied. Mid- to high-volume mailers will need to utilize some form of automation to help apply proper postage and keep the mail stream efficiently flowing. The bottom line is that all mailers will now need to be conscious of the size, thickness and weight of their mail pieces if they expect to save money and maintain productivity under the new structure.

Although these rules are not new, they will be better enforced by the post office.

ee also

USPS Links
* [http://www.usps.com USPS Main Page]
* [http://www.usps.com/ratecase/ USPS May 2007 Rate Change Page]

Manufacturer Pages
* [http://www.haslerinc.com/customers/custarea/ratechange/shapebased.aspx Hasler Shape-Based Pricing Page]
* [http://www.neopostinc.com/support/2007_usps_rate_change/index.html Neopost 2007 Rate Change Page]
* [http://www.pb.com/cgi-bin/pb.dll/jsp/Postalinfo.do?sitelet=RCEducation&catOID=-19118&editorial_id=ed_ECEd_Shape_Based_Price&lang=en&country=US Pitney Bowes Shape-Based Postage Pricing Page]

Industry News
* [http://www.dmnews.com/cms/dm-news/direct-mail/38717.html USPS Unveils Shape-Based Pricing Plans]
* [http://multichannelmerchant.com/opsandfulfillment/advisor/shapeweight_USPS/ 5 Steps to Shape-Based Postage Compliance]
* [http://www.buyerzone.com/mailroom/postage_meters/shape-based-pricing.html Shape-based pricing: Not your standard postage increase]


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