It’s been hard to avoid the conversation around postal rates in the commercial print industry over the past few months. As the Postmaster General has made aggressive moves to bring the United States Postal Service into profitability after the requirements to pre-pay the organization’s pension fund was finally relaxed, printers have borne the brunt of those rising prices. Print buyers have started pushing back when it comes to higher costs, especially as the costs of everything from the inks, to the paper, to the labor running the presses has also been on the rise.
But while it’s easy to expect the worst and talk about the doomsday scenarios, what’s the actual landscape look like for printers on the postal rate front? And how are they managing the increases?
John Miglautsch, founder of Miglautsch Marketing and long-time direct mail advocate for the industry, asks “Compared to what?” when it comes to rates going up. He points out that a major catalog job he ran in 1982 was about 62 cents per piece, compared to a similar catalog job in 2018 that came in around 67 cents.
“In 40 years,” he notes, “the price [to mail] a catalog hasn’t changed as much as the price of eggs in just the last few years.”
So while all the headlines pointing out rate increases are valid — after all, the rates are, in fact, increasing at a more aggressive pace than they did in the past — it is important to remember that postage is still a very economical way to reach consumers. Compared to other costs, it isn’t actually rising as fast as other areas of the business.
That doesn’t mean it has had no impact at all.
“Rising postal rates have had an impact on volume for sure,” Jeff Henke, the executive director of Postal Solutions at Quad, says. “It’s not just last year’s postage increases, but a compounding factor of twice-a-year increases over a three-year period.”
Leo Raymond, the managing director for Mailers Hub, notes that the proof of the impact is in the decline of overall mail volumes.
“Volumes compared to different periods were down by double digits,” he says. “And it is the opinion of most people in the mailing industry that the primary factor impacting that is the rapidly increasing prices on mail in general, and direct mail specifically. The Postmaster General denies it — he says it’s just a general decline — but even if that is true, it is being worsened by significant increases that have been imposed on mail.”
The aggressive increases are expected to continue through 2026, until the USPS can break even with its operating costs. But, Raymond notes, “numbers are saying they can’t paddle fast enough to go against the dropping volumes.”
“Mail equals math,” says Scott Harvey, who handles Direct Marketing Solutions at Quad, and is the company’s vice president of direct marketing. “Mail is such a great channel as it’s very measurable, which allows customers to forecast a response. As cost elements increase, clients react by scaling back and prioritizing more viable responders. This results in lower responders being removed from the mail files. So postal increases most certainly lead to a reduction in volume — but not because direct mail is ineffective, but rather as a reaction to the responsive curve. Direct mail remains a time-proven and effective media channel.”
Solutions, Not Problems
While you might be tempted to throw up your hands and say there’s nothing you can do about the USPS raising rates, that is not actually true. There are a number of things commercial printers can do to help mitigate the rising postal costs and help drive home the fact that even with those costs, print is still one of the most economical — and effective — vehicles for marketing across the board.
“Clients still need to understand the value of mail and the need to market to the customer base,” says Henke. “Mail is still a critical component to their business, so it’s vital to optimize mail and their marketing pieces to be more effective.”
Strong communication is something Raymond believes in, noting that “all you can do is tell the truth.”
“You have to talk to your clients, and they have to make decisions between the value and results of direct mail, and what the post office is charging for it,” he says.
Miglautsch notes that there are a number of things commercial printers should be doing, price increases or not. Things like lighter paper stocks and better list hygiene, he notes, will help improve the profitability of direct mail, and aren’t things printers should ignore when times are good.
“I’m not saying get comfortable,” he says. “Increases do force you to re-examine things, and you should be doing that. But rate increases will always keep coming.”
He urges printers to make the comparison to the increases in digital marketing vehicles when they’re having that conversation with clients.
“The price of digital ads has skyrocketed,” he notes. “Meta’s cost per thousand increased by 61% year-over-year from 2021 to 2022 — that’s 10 times the postal increase in a single year. The price of Google’s programmatic ads were up 75%. The price of TikTok [ads] was up 185% year-over-year in 2022.”
So when customers are upset over the increases in the price of postage, make sure you know how your increases compare with the other marketing channels they’re using.
“Through open communication with clients, we can identify their pain points and determine the best solution which may include merged mail, shared mail, commingling or saturation strategies,” Harvey says. “… The USPS increases have led to a state of disruption for the last several years, and with more price hikes, this disruption will continue. Clients must be willing to engage in the disruption to solve for this.”
Beyond just good communication, however, there are quite a few programs offered by the USPS that can help reduce postage rates. Commercial printers doing any type of mailing should make sure they are incredibly familiar with these programs, and know how to work them to their customers’ advantage.
“Look at the current set of promos and incentives being offered by the USPS — this time of year most of them have their own sets of criteria,” says Raymond. “These programs can offer a percentage discount, which can take off a good chunk of what the client would otherwise be paying.”
Testing and refining mail pieces is another strategy commercial printers should be pushing hard — even when postal rates aren’t a factor. Miglautsch, in particular, is a huge proponent of testing, citing one case study where he convinced a print buyer who was spending more than $500,000 every month on Google placements to pause that spending for a single week, taking that allocated budget and putting it toward mail instead.
Even within a mail campaign, Miglautsch stresses, the art of traditional A/B testing seems to have been lost.
Testing goes beyond the individual piece or message, as well.
“Customers who aren’t willing to test new solutions and change are the ones that take the brunt of the hit on postal increases,” Henke notes. “Partnering on mailing with other mailers and sharing in the cost of postage really has a significant impact on postage. Co-mail and commingle solutions, while relatively recent to the market, provide tremendous opportunity. Enhancements in data cleansing, inline co-mail offerings, and shared mail offerings all combine to reduce postage. It’s key to have solutions that integrate into an overall optimization strategy and a mailer who is willing to take advantage of that model. In most cases today, it’s about enhancing your work share solutions and optimizing that 10% or 20% additionally.”
So what does all of this mean for the average commercial printer? The summary here is that rising postal rates don’t have to mean your direct mail operation takes a hit — it just means being smarter about mail.
By staying on top of the wide range of discounts and programs the USPS offers, working with customers to refine messages, reducing costs on things like paper stock, using best practices to keep a clean mail list, and even using advanced finishing techniques thoughtfully can all ensure direct mail continues to outperform every other channel, getting you a bigger bang for the marketing buck, no matter how much postage rates increase this year.
