New Prices New Flexibility New Opportunities May 12, 2008

New PricesNew Flexibility

New Opportunities

May 12, 2008

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Agenda

Postal Act of 2006 Mailing Services Shipping Services Resources

New Prices – May 12, 2008

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Postal Act of 2006

Two categories:► Mailing Services with a cap► Shipping Services with a floor

Flexibility Predictability Choices Speed-to-market


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Mailing Services

First-Class Mail (includes First-Class Mail International)

Standard Mail Special Services Periodicals Package Services

New Prices – Mailing Services – May 12, 2008

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Mailing Services

Consumer Price Index (CPI) cap 2.9% average increase by class Annual, predictable price changes 45-day notice required 90-day commitment


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First-Class Mail

$38 billion revenue Average +2.89%


Product % Change

Single-Piece Letters & Cards 2.50

Presort Letters & Cards 3.55

Flats 1.93

Parcels 2.18

International 3.09

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First-Class Mail – Single-Piece

Letter: 42¢ (+1¢)

Forever Stamp► Plenty of stamps on hand

No more nondenominated transition stamps


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First-Class Mail – Single-Piece

Additional ounce: 17¢ (unchanged)

Nonmachinable surcharge: 20¢ (+3¢)► New 62¢ stamp for 1-ounce square

envelopes such as greeting cards Postcard: 27¢ (+1¢)


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Promote efficient preparation Maintain strong 2.2¢ incentive for 5-digit Presort letters additional ounce

same price as for auto: 12.5¢ (- 4.5¢)

First-Class Mail – Automation & Presort Letters


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Align with domestic► Shape-based pricing

First-Class Mail International


1 ounce to Canada/Mexico 2007 New Change

Letter 69¢ 72¢ +3¢

Flat 69¢ 98¢ +29¢

Package 69¢ $1.18 +49¢

Nonmachinable letter surcharge: 20¢ Align country grouping with other international products

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Standard Mail

$21 billion revenue Average +2.84%


Product % Change

Letters 3.31

Flats 0.86

Parcels and NFMs 9.66

High Density / Saturation Letters 1.66

High Density / Saturation Flats and Parcels 2.09

Carrier Route Basic Letters, Flats, and Parcels 2.99

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Standard Mail Flats (catalogs)

Price increase well below average

Examples (5-digit/DBMC) 2007 New Change

3-oz Catalog 30.2¢ 30.6¢ +0.4¢

4-oz Catalog 35.8¢ 35.9¢ +0.1¢

5-oz Catalog 39.4¢ 39.4¢ 0.0¢

8-oz Catalog 47.6¢ 47.5¢ -0.1¢


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Lower pound prices for saturation and high-density flats

Examples (Saturation at DDU) 2007 New Change

3-oz Catalog 13.6¢ 14.0¢ +0.4¢

4-oz Catalog 15.2¢ 15.5¢ +0.3¢

5-oz Catalog 17.6¢ 17.7¢ +0.1¢

8-oz Catalog 24.6¢ 24.4¢ -0.2¢


Standard Mail Flats

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Periodicals

$2.2 billion revenue Average +2.72%


Product % Change

Outside-County 2.71

In-County 2.63

Allow recent changes to settle in and work on efficiency

New, limited-circulation pricing

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Package Services



Product % Change

Parcel Post 3.30

BPM Flats 0.47

BPM Parcels 2.10

Media Mail and Library Mail 4.54

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Special Services



Product % Change

Post Office Boxes 2.89

Certified Mail 1.89

All others 3.29 Certified Mail: $2.70 (+5¢) Return Receipt: $2.20 (+5¢) Annual Mailing Fees: $180 (+$5) Delivery Confirmation: no change

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Shipping Services

Greater pricing freedom and flexibility No price cap Each product and contract must cover cost Must cover 5.5% of Postal Service overhead 30-day notice required 60-day commitment

New Prices – Shipping Services – May 12, 2008

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Shipping Services

Priority Mail International Express Mail Parcel Select Parcel Return Service


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New Price Structures and Incentives

Price Lists Retail prices Commercial base prices Commercial volume prices

Negotiated pricing Commercial contract prices


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Express Mail

Average +3% Sunday and holiday premium: $12.50 (introduced March 3)

Zoned pricing with competitive local pricing


Retail Prices New

Weight 2007 Zones L, 1 & 2 Zone 3

Flat-Rate Envelope $16.25 $16.50 $16.50

1/2 lb. $16.25 $12.60 $14.65

3 lb. $24.50 $16.65 $21.35

10 lb. $45.25 $28.60 $38.10

Rename Post Office-to-Post Office as “Hold For Pickup”

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Express Mail

Commercial base prices 3% lower than Retail for

Express Mail Corporate Accounts (EMCA), Click-N-Ship, and PC Postage


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Express Mail

Commercial volume prices EMCA and PC Postage


Minimum Quarterly Volume

Additional %

(postal quarterly rebate)Total % off retail

125 2% 5%

438 4.5% 7.5%

938 7% 10%

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Priority Mail

Average +6% New large Flat-Rate box (introduced March 3)

► Lower price for APO/FPO addresses


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Priority Mail

Commercial base prices Lower than retail for Click-N-Ship, PC

Postage, and permit imprint


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Priority Mail

Price examples


Flat-Rate 2007 Retail Commercial

Envelope $4.60 $4.80 $4.75

Box (regular) $8.95 $9.80 $9.30

Box (large)(introduced March)

$12.95 $12.95 $12.50

Box (large) APO/FPO(introduced March 3)

$10.95 $10.95 $10.50

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Parcel Select

Last-mile commercial service Average +5.7% Promote destination delivery unit (DDU) Commercial volume prices for DDU

► Based on new growth above a threshold► Annual rebates


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Parcel Return Service

First-mile commercial service Average +2% Align pricing with outbound DDU

► Weight-based pricing


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Global Express Guaranteed

Average +5.2%

Retail price examples


2007 New Change

1/2 lb. $37.00 $38.95 $1.95

5 lbs. $77.00 $82.00 $5.00

Expedited date-certain delivery with money-back guarantee to over 190 countries

Commercial base prices ► 10% lower than retail for Click-N-Ship and PC Postage

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Express Mail International

Average +6%



Date-certain delivery with money-back guarantee for packages sent to Pacific Rim countries

2007 New Change

1/2 lb., Flat-Rate Envelope $25.00 $25.95 95¢

5 lbs. $44.00 $45.50 $1.50

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Commercial base prices ► 8% lower than retail for Click-N-Ship,

PC Postage, Global Shipping Software (GSS), and Express Mail Corporate Account (EMCA)

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Commercial volume prices► Express Mail Corporate Account

Annual Volume Annual PostageCommercial Base Price Incentive

Commercial Volume Price

Incentive

No minimum No minimum 8%

1,000–2,999 pieces $20,000–$59,999 10%

3,000 pieces and above $60,000 and above 12%

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Priority Mail International

Average +6.1%



2007 New Change

Flat-Rate Envelope $11.00 $11.95 95¢

5 lbs. $38.00 $40.50 $2.50

Flat-Rate Box (regular) $37.00 $38.95 $1.95

New large Flat-Rate box (introduced March 3)

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Priority Mail International

Commercial base prices ► 5% lower than retail for Click-N-Ship,

PC Postage, and permit imprint


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International Priority Airmail (IPA) and International Surface Airlift (ISAL)


Average price increase► IPA: 12.5%► ISAL: 21.3%

Continue published prices for full-service and drop ship

Eliminate published ISAL prices for Direct Shipment► Now, available through customized agreement

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Resources


USPS.com/prices

► Mailing Services and Shipping Services highlights► New price lists► Downloadable price files► New Postage Statements► Federal Register notices

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Resources

Postal Explorer (pe.usps.com)

PCC Insider – PCC e-newsletter ([email protected]) DMM Advisory – customer e-newsletter

([email protected])

P&C Weekly – employee e-newsletter ([email protected])

MailPro – late April (usps.com/mailpro)


Documents

New Prices New Flexibility New Opportunities May 12, 2008