Postal Service employees sort mail at the Los Angeles Processing and Distribution Center on Nov. 30, 2022. The new cost-saving proposal will have to receive approval from the Postal Regulatory Commission. FREDERIC J. BROWN/AFP via Getty Images
USPS to offer discounts in hopes of boosting mail usage
The Postal Service hopes to boost revenue from its largest customers by up to $1.3 billion.
The U.S. Postal Service is taking a new strategy to slow the steady and precipitous decline of mail volume, offering its largest customers a discount if they increase their usage of the system.
USPS painted the new offerings as a win-win that will provide savings to mailers while generating new revenue for the agency. The strategy will boost loyalty to the Postal Service, management said, while also improving the agency’s finances. All told, it expects to generate between $800 million and $1.3 billion in new revenue as part of the initiative.
The Postal Service will offer one incentive for First-Class mail and other for marketing mail. For every piece of mail after its 1 millionth that a customer sends in 2024, it will receive a 30% discount. If the user sent more than 1 million pieces in 2023, the discount will only kick in after it surpasses its total that year. Different mail products have different prices to the exact discount will vary, but will be calculated based on average-per-piece price for each customer.
“These two incentives will drive mail owners to increase the volume of First-Class and Marketing mail entering the network while providing them lower overall postage costs on incremental growth — allowing mail owners to maximize total return on investment, by providing additional cost-savings and strengthening the value of mail,” USPS said in a statement announcing the product, which will have to receive approval from the Postal Regulatory Commission.
Stephen Kearney, executive director of the Alliance of Nonprofit Mailers, praised the new offerings and said mailers have long called for something similar since USPS briefly tried them out in the early 2000s.
“If approved by the PRC timely without too many additions or changes, this could be a boon for many mailers,” Kearney said. He noted USPS already offers many negotiated discounts with individual businesses sending packages.
In one example, USPS found a mailer who sends 5 million mail pieces in 2024 after sending 4.5 million pieces in 2023 could save around $96,000, depending on the exact makeup of the products they send. The discount will be paid out as credits in three installments and must be cashed in by the end of 2025.
“Promotions and incentives build stronger relationships between the Postal Service and the mailing industry and encourage mailers to continue to use the mail to engage with their customers, expand their customer base, and increase customer loyalty,” USPS said in its proposal to PRC.
In the most recent fiscal quarter, USPS saw First-Class mail volume decline by 6% compared to the same period in the prior year, though its revenue increased by 4% due to significant increases in mail prices. Marketing mail volume dropped by 16%. Between 2007 and 2022, First-Class and marketing mail volumes have declined by a whopping 42%.
USPS said the initiative supports Postmaster General’s Louis DeJoy’s 10-year Delivering for America plan by “working with industry to promote the use of mail to grow volume and revenue.”