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Good News-Bad News: Priority Mail Rates Change Next Month

The United States Postal Service is raising rates for Priority Mail when purchased at the Post Office. But, it is lowering rates for those who purchase Priority Mail postage online, a further incentive for merchants to print labels online.

The USPS announced the new rates last month, and the Postal Regulatory Commission issued its order approving the rate changes on Friday, August 15th. The new rates take effect on September 7th.

As an example of retail rate increases, the Small Flat Rate Priority Mail box is going from $5.80 to $5.95, a 2.6% increase; a Medium Flat Rate box is going up 2.4% from $12.35 to $12.65; and a Large Flat Rate box is going up 2.6% from $17.45 to $17.90.

In its report, the PRC noted that the Postal Service indicated that the overall average rate change for Priority Mail is 0 percent. However, there is great variation among the three classifications and within each one.

Retail has an average rate increase of 1.7 percent.

Commercial Base has an average rate decrease of 0.9 percent

Commercial Plus has an average rate decrease of 2. 3 percent.

Rate decreases in ground zones (zones 1 – 4) and for heavier weights (6 – 20 pounds) within the Priority Mail product “are designed to enhance Priority Mail’s market position” by attracting ground volume in those “cells.” You can read all about the new rates in the PRC report (pdf format).

guide from Endicia about the changes recommends shippers re-evaluate their shipping mix and consider the U.S. Postal Service for heavier packages, “rather than using the private carriers who typically tack on hefty fees such as residential delivery surcharges, fuel surcharges, as well as fees for Saturday, residential and rural deliveries and address correction; all of which are offered at no extra charge by USPS.”

So it’s no wonder UPS and FedEx aired some concerns over the competitive nature of the rate changes, which were noted by the PRC – we’ll have more on that in tomorrow’s Newsflash. (See UPS and FedEx Unhappy over USPS Pricing.)

Endicia cofounder and General Manager Amine Khechfe said the price change would directly benefit sellers using online postage vendors – especially those shipping products weighing more than 5 pounds.

The Priority Mail service is extremely popular among lower- and medium-volume online sellers, and the USPS is using Priority Mail as a key part of its strategy as its package business grows. It rebranded its Express Mail service to “Priority Mail Express” last year, adding an estimated delivery time and free insurance for domestic delivery. And last week, the USPS began airing a new ad promoting package delivery – including Sunday delivery – with a “priority: you” theme.

The Postal Service said consumers and businesses shipped 871 million pieces through Priority Mail last year.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.