Postage is the greatest expense in any mailing project, whether direct mail advertising, transactional communications, or regulatory notifications. In the USA the cost to send mail is relatively cheap compared to other countries, but that doesn’t mean mailers should spend more than necessary.
The US Postal Service allows commercial mailers to lower their postage costs through a program called workshare discounts. Doing some of the work necessary to distribute and track the mail entitles mailers to pay reduced postage rates. Mailing professionals at your mail service provider (MSP) know how to qualify for these discounts and pass savings along to their clients.
The Postal Service requires mail to meet certain criteria to qualify for workshare discounts. MSP’s add value to their services by ensuring client mail qualifies for postage discounts by meeting standards for:
The USPS spends about 1.3 billion dollars every year handling mail they can’t deliver because of inaccurate addresses. By fixing addresses in advance, mailers help the Post Office lower their costs. They receive postage discounts in return. Unlike many kinds of business data, mailing professionals can standardize and correct mailing addresses without creating extra work for their clients. Mail service providers use sophisticated software and USPS databases to make sure streets and cities are spelled correctly, proper abbreviations are used, and addresses fall within a range of known house numbers.
Once an MSP standardizes and corrects addresses, they compare client mailing files to the National Change of Address (NCOA) database. The software updates the addresses for any individuals, families, or businesses who have filed a change of address notice with the Post Office.
The US Postal Service checks the mail for accuracy. If mail exceeds certain error thresholds, the USPS can fine mailers or revoke postage discounts. MSP’s must be diligent in their mail preparation efforts, continually adjust their procedures, and update software when mailing regulations change.
Intelligent mail barcodes (IMb’s) contain a wealth of information that allow the US Postal Service to route the mail, track mailpieces as they proceed through the distribution network, and more. The USPS must process un-barcoded mail through multi-line optical character readers (MLOCR’s). These machines read the printed addresses, look up information, and spray the barcodes on the mail. When mailers present mail already encoded with the IMb’s they qualify for special postage rates and save the Postal Service time and money.
Sorting mail into a sequence that allows for efficient routing and transportation speeds delivery and saves the USPS a tremendous amount of money. When mailers can present mail trays, pallets, or truckloads of mail already coded and sorted for delivery the Postal Service rewards them for their efforts with postage rate reductions.
Mailing today is a data-driven automated process. MSP’s must abide by USPS rules for how they handle the data, create and package the mailpieces, and transmit information to the Postal Service. Large data files prepared by MSP’s provide all the information the Postal Service needs to track the mail, charge mailers for postage, verify the mail meets all regulations, and perform other necessary actions. Trays and other mail containers must include identifying tags and labels. The days of filling out paper mailing forms and manually preparing the mail have past.
Just because MSP’s produce mail in a certain location doesn’t mean it must enter the mailstream at the closest USPS facility. Some MSP’s include logistic services. They analyze the mail and decide if trucking some of it to locations closer to the final destination is more cost-effective than depositing the mail locally. Known as drop-shipping, this tactic earns mailers extra postage discounts. Drop-shipping is most often used for marketing mail with a target in-home date. On a national mailing, inducting the mail locally in each market provides for more predictable final delivery dates.
Postage Savings for Clients
Print/mail service providers generally pass postage savings along to their clients. Most do not describe postage discounts as line items on client invoices so clients may need to investigate to determine exactly how the service providers compute their postage bills.
For repetitive jobs such as bills or statements, MSP’s will often analyze a client’s mailing data to determine the sortation level at which the mail will qualify. Clients with high geographic concentrations of customers, such as utility companies, will qualify more of their mail at lower postage rates than clients who mail to customers dispersed across large areas. MSP’s will quote each client an average postage rate based on the characteristics of their mail. Mail service providers may compensate clients for any additional discounts earned through co-mingling or other extra work they do. They may factor the savings into per-piece prices for printing and mailing.
In other cases, such as for one-time mailings, MSP’s might track actual postage paid and pass the cost through to the client. Prices for printing and mailing services might be slightly higher since the MSP won’t be keeping a portion of the workshare postage discounts.
You should never pay more for postage than necessary. Overpaying doesn’t get your mail delivered any faster or provide any extra benefit. Call the document delivery specialists at Lanvera to talk about strategies for lowering your postage bill.