On May 28, 2021, as part of “Delivering for America,” its 10-year plan to achieve financial sustainability and service excellence, the United States Postal Service filed notice with the Postal Regulatory Commission (PRC) requesting price changes to take effect Aug. 29, 2021 that are in accordance with approvals provided by the PRC last year.
The proposed price changes would raise overall Market Dominant product and service prices by approximately 6.9 percent. First-Class Mail prices would increase by 6.8 percent to offset declining revenue due to First-Class Mail volume declines. In the past 10 years, mail volume has declined by 46 billion pieces, or 28 percent, and is continuing to decline. Over the same period, First-Class Mail volume has dropped 32 percent, and single piece First-Class Mail volume — including letters bearing postage stamps — has declined 47 percent.
The proposed Mailing Services price changes include:
Summarized Price Changes |
First-Class Mail |
Current Prices |
Planned Prices |
First-Class Mail Single-Piece Letters (1 oz.) |
$0.55 |
$0.58 |
First-Class Mail Single-Piece Letters additional ounce |
$0.20 |
$0.20 (unchanged) |
First-Class Mail Letters (metered 1 oz.) |
$0.51 |
$0.53 |
First-Class Mail Domestic Postcards |
$0.36 |
$0.40 |
First-Class Mail Single-Piece Flats (1 oz.) |
$1.00 |
$1.16 |
International |
Current Prices |
Planned Prices |
Outbound International Letters (1 oz.) |
$1.20 |
$1.30 |
Under the current pricing model and the proposed rate change, the Postal Service still has some of the lowest letter-mail postage rates in the industrialized world and continues to offer a great value in shipping.
The complete Postal Service price filings with prices for all products can be found on the PRC site at https://www.prc.gov/dockets/active/R. A fact sheet on the Postal Service’s rate change request is available here: https://about.usps.com/what/strategic-plans/delivering-for-america/#prc.
Additional Information
What is happening to the prices?
- The rate change request is part of a balanced approach under “Delivering for America,” the Postal Service’s 10-year plan for achieving financial sustainability and service excellence.
The Postal Service is asking the Postal Regulatory Commission (PRC) to review increases in the prices of a First-Class Mail® (FCM) Forever stamp, metered mail 1-ounce, postcard, and single-piece 1-ounce flats, among other products.
Prices for business customers — marketing mail, periodicals and other special services — will also increase.
Even with post rate increases, USPS prices will remain among the world’s most affordable.
When will the change take place?
- The change is expected to take effect August 29, 2021, if approved by the PRC.
Why are the prices changing?
-
As part of its 10-year plan to achieve financial sustainability and service excellence, the Postal Service is asking the PRC to review proposed increases to the prices of a FCM Forever stamp, single-piece, metered mail 1-ounce, postcard, and single-piece 1-ounce flats, among other products.
In the past 10 years, mail volume has declined by 46 billion pieces, or 28 percent, and is continuing to decline. In the same time frame, First-Class Mail has dropped 32 percent and single piece First-Class Mail — including letters bearing postage stamps — has declined 47 percent.
The new rates, a more rational pricing approach – if approved by the PRC for our market-dominant products, will keep the Postal Service competitive while providing the agency with needed revenue.
Even with post rate increases, USPS prices will remain among the world’s most affordable.
What is the cost of a new Forever stamp if the change is approved?
- If favorably reviewed by the PRC, the new prices will include a 3-cent increase in the price of an FCM Forever stamp, from 55 cents to 58 cents.
How will this change help the Postal Service?
- The rate change request is part of a balanced approach under “Delivering for America,” the Postal Service’s 10-year plan for achieving financial sustainability and service excellence. With full implementation, the 10-year plan reverses a projected $160 billion in losses over the next 10 years. The proposed rate changes are expected to generate $44 billion over the next 10 years.
Why is the Postal Service losing money with mail?
- For the past 14 years, the Postal Service has had limited pricing authority to respond to changing market realities.
The Postal Accountability and Enhancement Act (PAEA) of 2006 capped price increases for mailing services at the Consumer Price Index (CPI). it also required the PRC to evaluate the price cap system 10 years after the date of enactment (i.e., December 2016), and to modify or replace the system if it was not meeting the objectives of the law.
A price cap for the Postal Service cannot use Consumer Price Index (CPI) alone. CPI estimates inflation based on purchases of typical household quantities of select goods and services, ultimately presenting a general picture of the overall economy. But the Postal Service’s cost profile and demand trends, including a decline of mail volume, a growing number of delivery points, and increased labor and retirement costs, are not like those of the average company. This is why the Commission recognized that CPI must be adjusted to fit the price cap to the Postal Service.
The CPI-based-only price increases have done financial harm to the Postal Service. The new rates, a more rational pricing approach and more effectively aligning prices to the marketplace – as approved by the PRC for our market-dominant products, will keep the Postal Service viable and competitive while providing the agency with needed revenue.
How much money does First-Class Mail generate for the Postal Service?
- FCM is the highest revenue generating mail class, accounting for $23.8 billion, or 33 percent, of the $73.2 billion in total revenue in FY20.
How much mail did the Postal Service deliver in 2020?
- The Postal Service delivered 129.2 billion pieces of mail to more than 161 million addresses across the country.
How do the USPS stamp prices compare to other Posts’ prices around the world?
- Even with post rate increases, USPS prices will remain among the world’s most affordable.
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Do you expect to raise rates again in October 2021?
- We’re continually reviewing our pricing approach for all products.
Are the rates changing for international stamps?
- The price for international stamps will increase by a dime, from $1.20 to $1.30.
As a result of the Plan, will the public have to pay higher rates for slower mail service?
- The Plan enables reliable and predictable service to our customers and proposes a fair pricing approach that aligns to market realities. We are pursuing a rational pricing approach, using pricing authority approved by the PRC for our market-dominant products. The Plan will enable us to design a precise and efficient processing and transportation network, positioning us to deliver 95 percent of all mail and packages on-time. Judicious price increases paired with investment in our network will allow us to provide the predictable, reliable service that the American people expect and deserve and ensure the financial sustainability of the Postal Service.
Are there other ways the Postal Service can improve its financial standing without raising prices?
- Price changes make up one of four main approaches outlined in our Plan, all of which must be executed to reverse $160B in projected losses over the next 10 years. Some other aspects of the Plan require a lengthy legislative process and Congressional approval to carry out. However, price changes, as well as other Plan elements to increase efficiencies and reduce costs, are self-help strategies that the Postal Service can initiate right now. The extent to which other parts of the Plan are successful, such as the legislative and administrative requests, could serve to mitigate the need for price increases as we move forward.
Will raising mail prices further decrease mail volume?
- The Postal Service has been experiencing shrinking mail volume for over a decade. These trends are expected to continue in the coming decade, with total volume expected to decline by 36 percent by FY2030. The Plan addresses the inevitable volume decline by modestly adjusting postage prices to cover the rising costs of serving every delivery address across America. This is an honest reflection of the reality of associated costs and the compensation for USPS products and services.