No one can accuse the U.S. Postal Service of following the pack. It not only dismissed the strategy of pricing packages based on size as well as weight (referred to as dim weight pricing); it actually plans to lower prices for a good portion of its flagship Priority Mail products.

Few were surprised when UPS recently followed rival FedEx’s lead and announced it would price parcels based primarily on how much space they take up during transport. The new pricing scheme is expected to generate significant revenue for the two integrators. Industry observers were curious to see if the Postal Service would jump on the dim weight bandwagon, or if the agency saw a better opportunity in trying to poach customers with its simpler pricing scheme. Few predicted the Postal Service would lower prices.

Not all Priority Mail prices are going down, however. Retail prices on Priority Mail flat-rate boxes will in fact increase by 1.7 percent on average, if the Postal Regulatory Commission approves the Postal Service plan. For example, the small flat-rate box would increase 35 cents to $5.95 on September 7, if approved.

Still, small mailers could save by printing their own labels either from the Postal Service’s Click-N-Ship online offering, or from PC Postage products, permit imprints, or digital mailing systems. Using an online option moves customers into Commercial Base pricing, where they will get lower prices, on average, under the Postal Service proposal. The biggest price cuts – about 2.3 percent on average – would come in Commercial Plus prices, which require a commitment of 50,000 pieces in a year.

The Postal Service’s Priority Mail has seen solid growth over the past 3 years (25 percent in revenue). But postal officials have indicated they want to capture more business shippers and this price cut is one initiative meant to attract those commercial customers. Some observers think that, even without the proposed price break, the Postal Service would have won customers from UPS and FedEx once their prices increased. But others suggest the reduced rates might entice even more business customers to try the Postal Service.

Should the Postal Service lower its Priority Mail prices, keep them the same, or raise them slightly given an expected migration from UPS and FedEx? 

Comments (8)

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  • anon

    In my opinion, prices for postal services available to consumers online should also be available at the post office for consumers who either do not own or know how to operate a computer. The parcel select service available online is cheaper than standard post available at the post office. Equal pricing for all!

    Oct 10, 2015
  • anon

    I never recieve any packages at my home and as it looks the postal worker does not bring the package out they just put the "sorry we missed you " paper in with the other mail. I would like to know if this is some new thing where the postal carriers don't have to deliver packages that people pay for and still keep their jobs. Is it easier not to deliver the packages and the day goes faster. Yet, the consumer looses because they spend a lot of time trying to track down packages that either stay in lembo or get returned to sender. Many people depend and support the postal service but, for me it has let me down. I now have to ask people that don't live in my area can I have my packages delivered to their homes because that way I will know that I will recieve my package.

    Jul 28, 2014
  • anon

    I work in a Priority plant. We receive tons of "Flat Rate" boxes containing anything from rocks to ceramic tile and bullet casings. WRAPPED IN DUCT TAPE!!! Having these put on the machine to sort is causing a lot of damage to the packages that are at the bottom of the sack!! How much insurance money os paid out to damaged items due to these heavy packages? It's insane!!

    Jul 19, 2014
  • anon

    I asked this before but no one was listening so I will try again--who are you trying to fool by saying the Postal Service does not price parcels using DIM weight? This is done EVERY day, and dimensions of parcels are even required for click and ship parcels mailed on line. Stop trying to pretend the USPS didn't follow the pack. It started the idea!!!!!! The only problem now is drop shipments. Previously Fed EX and UPS were drop shipping their large parcels for last mile delivery at the Postal Service for carriers to deliver and no DIM weight postage was being collected. Now they will collect this and STILL drop the large parcels without giving any additional funding for these last mile parcels to the USPS. Now if you still don't think the Postal Service charges DIM weight, carry a big lightweight box to the post office and watch the clerks measure it and pay extra to mail it.

    Jul 19, 2014
  • anon

    I agree! We started the DIM thing. Why else do think we measure stinkin' parcel? And I agree about UPS and Fed collecting more money and laughing all the way to the bank at us. Whoever did this report should have done their homework.

    Aug 02, 2014
  • anon

    I am extremely happy with my service. It seems each time I send a package, it gets there early than anticipated. This time I was sending a birthday gift to a 7-yr-old by priority mail and was afraid I didn't send it in time. Not only did it get there in time, it got there a day early. Good work!

    Jul 18, 2014
  • anon

    I would much rather do business on my computer at home and not have to drive to a post office. Why should I wait in a line at the Post Office when I want to mail a package. I can save time and money. I can do it 24/7 and also save even more money on postage with clip and ship. It is a no brainer!!

    Jul 15, 2014
  • anon

    Does anybody remember when Scully took over Apple computers? He changed their pricing structure. In the begining no matter how many computers you bought the price was the same. All Apple customers were on the same footing. There were computer stores all over with knowledgeable staff who helped people join the information revolution. As soon as "big" buyers got price breaks the little guys disappeared. I believe that USPS should have one pricing scheme for all. It seems that usps is trying to court the big shippers by using discounts (giving away profits) and stepping on the little guys ( adding profit). Where is the growth which USPS is looking for? It is the little guys who will become the next big guys. Court them and see REAL growth.

    Jul 15, 2014

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