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USPS Rolls Back Market-Dominant Postage Rates

A quick reminder for readers that the cost of a postage stamp is set to drop on April 10, though there could be a last-minute intervention that would keep rates the same.

Lower costs are always a good thing for online sellers, but this change does not impact most packages, which just saw big hikes in January. Instead, this impacts what is called market-dominant products (such as First-Class Mail, magazines, and advertising mail) as opposed to packages, which are considered competitive products.

The US Postal Service had received permission to raise market dominant postage rates higher than the Consumer Price Index (CPI) in 2014 due to lost revenue caused by the 2008 – 2009 recession, but only on a temporary basis. The Postal Regulatory Commission allowed the USPS to recover the $2.8 billion it estimated was lost, calling it an “exigent price increase,” and in January 2014, the cost of a stamp went from 46 cents to 49 cents.

This month, the USPS Office of Inspector General said market-dominant prices will drop on April 10th an average of 4.3 percent unless Congress enacts postal legislation that makes the exigent rates permanent, or the federal appeals court issues a ruling favorable to the Postal Service.

The USPS issued a statement in February stating that the mandatory price reduction would worsen its financial condition by reducing revenue and increasing net losses by about $2 billion per year.

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The chart above shows the Postal Service makes most of its revenue from market dominant products, though it sees a much higher revenue growth rate from competitive products.

For the rest of us, those Forever stamps we purchased at 49 cents will be worth 2 cents less next month – no April Fool’s.

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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.