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Shaping a More Efficient Future Price Change Proposal. Mailers’ Technical Advisory Committee. Stephen M. Kearney Vice President Pricing & Classification May 17, 2006. High-Level Goals. Growth Efficiency Cost coverage Addressing Positioning for the future. High-Level Initiatives. - PowerPoint PPT Presentation
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1
Shaping a More Efficient FuturePrice Change Proposal
Mailers’ Technical Advisory Committee
Stephen M. KearneyVice PresidentPricing & ClassificationMay 17, 2006
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High-Level Initiatives Shape-based pricing
– Less emphasis on weight
Incentives– Containers– Drop shipping– Sorting– Packaging
More choices Forever Stamp Low-cost Address Change Service
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Agenda Review full product line
– Strategy– Significant changes– Specific examples
Timeline to 2007 Questions
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First-Class MailStrategy Shape-based pricing schedules
– Letters– Flats– Parcels
De-emphasize weight
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First-Class MailSignificant Changes Forever Stamp Single-piece 39¢ ►42¢ Postcards 24¢ ►27¢ Additional ounce 24¢ ►20¢
– Letters over 1 ounce go down– Flats over 6 ounces go down
Similar pattern for workshare New Business Parcel category
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First-Class MailExamples
Weight Current Proposed
1 ounce 39¢ 42¢2 ounce 63¢ 62¢3 ounce 87¢ 82¢
Letters
Weight Current Proposed
1 ounce 52¢ 62¢7 ounce $1.83 $1.8213 ounce $3.27 $3.02
Flats
Weight Current Proposed
1 ounce 52¢ $1.007 ounce $1.83 $2.2013 ounce $3.27 $3.40
Parcels
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First-Class MailExamples
Item Current Price
Proposed Price Opportunity
Proposed Price with
Modification
6 oz. parcel $1.59 $2.00Reconfigure
as a flat $1.62
2 oz. flat $0.63 $0.82Reconfigure
as a letter $0.62
+ 19¢
+ 3¢+ 41¢
- 1¢
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Priority MailStrategy Cover costs
– Especially large lightweight items
De-emphasize weight for heavier items
Continue to improve convenience
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Priority MailSignificant Changes Dimensional weight pricing for
Zones 5-8 Lower prices for heavier items Permanent Flat Rate Box
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Priority MailExamples
Item Current Proposed
Flat Rate Envelope $4.05 $4.65
Flat Rate Box 8.10 8.80
12-pound (Chicago to Los Angeles) 19.80 22.85
25-pound (Chicago to Los Angeles) 36.85 31.05
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Priority MailExamples
Item Current Price
Proposed Price Opportunity
Proposed Price with
Modification
Zone 8, 10 pound, 1.6 cubic foot
parcel$20.25 $28.75
Reduce size by 25% to 1.2 cubic
feet$24.85
+ $8.50 + $4.60
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Express MailStrategy Low-cost alternative for
shipping documents
Significant Change New 1-pound price
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Express MailExamples
Price change examples Current Proposed
Up to 1/2 Pound & Flat Rate Envelope $14.40 $16.25
Over 1/2 Pound, up to 1 Pound 18.80 19.50
Over 1 Pound, up to 2 Pounds 18.80 21.40
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Standard MailStrategy Align pricing with operations
– Encourage growth of efficient, effective mail
Expand shape-based pricing
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Standard MailSignificant Changes Increase drop ship incentives Add more presort options Create distinct prices for parcels Add “Not Flat-Machinable” category Discontinue destination delivery unit
rate for letters Differentiate prices for detached
address labels
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Standard MailExamples
Item Current Proposed
Advertising letter (3-digit auto, DBMC) 19.2¢ 20.7¢
Non-machinable letter (3-digit, DBMC) 30.3¢ 39.5¢
Catalog (3-ounces, 3-digit auto, DBMC) 25.3¢ 30.0¢
Catalog (3-ounces, 5-digit auto, DBMC) 25.3¢ 27.2¢
Catalog (8-ounces, 5-digit auto, DBMC) 44.1¢ 44.9¢
Catalog (8-ounces, 5-digit auto, DSCF) 42.8¢ 43.3¢
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Standard MailExamples
Item Current Price
Proposed Price Opportunity
Proposed Price with
Modification
8 oz. parcel, basic presort, no
drop ship82.4¢ $1.301
Enter at destination BMC
$1.101
12 oz. parcel 3/5-digit presort,
DSCF85.3¢ 93.9¢
Enter at DDU, 5-digit presort
80.1¢
4 oz. rigid auto flat, 5-digit
presort, DSCF27.5¢ 49.1¢
Use auto-compatible
flexible packaging
29.1¢
+47.7¢ +27.7¢
+8.6¢ - 4.2¢
+18.7¢ +1.6¢
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PeriodicalsSignificant Changes New 85¢ container charge Enhanced drop ship incentives
– Particularly for high-editorial content
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PeriodicalsExamples
Item Current Proposed
Weekly news magazine (6 oz., 40% adv., CR-RT, SCF, 2000-piece pallet) 17.9¢ 20.0¢
Opinion journal (5 oz., 10% adv., 3-digit, zone 4, 50-piece sack) 29.5¢ 33.6¢
Local Newspaper (4 oz., DDU, CR-RT) 8.5¢ 10.5¢
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PeriodicalsExamples
Item Current Price
Proposed Price Opportunity
Proposed Price with
Modification
8 oz., 5-digit auto, mailed in sacks (40 pieces per
sack)
33.4¢ 38.1¢
Co-palletize with another
magazine (1639 pieces per pallet)
36.1¢
As above, but entered at DADC
31.2¢
+ 4.7¢
+ 2.7¢
- 2.2¢
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Package ServicesSignificant Changes Discontinue retail Bound Printed
Matter Lower increase for DDU and
DSCF entry Require barcodes on all Parcel
Select items
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Package ServicesExamples
Price change examples Current Proposed
1-Pound Parcel Post $3.95 $4.55
5-Pound Parcel Post (Chicago to Los Angeles) $9.11 $9.45
5-Pound Parcel Select DDU $1.51 $1.67
15-pound Parcel Select DSCF $3.27 $3.88
1.5-Pound BPM flat DSCF presort 73.1¢ 72.8¢
5-Pound BPM parcel DBMC presorted & barcoded $1.298 $1.516
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Special ServicesStrategy Improve address quality Modernize services
Significant Changes New low-cost One Code Address
Change Service for letters Redesign Insurance Reduce electronic Return
Receipt fee
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Special ServicesExamples
One Code ACS fees Current Proposed
Automated First-Class Mail (letters only)
First two notices, each N/A 0¢
Additional notices, each N/A 5¢
Automated Standard Mail (letters only)
First two notices, each N/A 2¢
Additional notices, each N/A 15¢
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Special ServicesExamples
ACS fees Current Proposed
Electronic ACS notifications (First-Class Mail) 21¢ 6¢
Electronic ACS notifications (other classes) 21¢ 25¢
Manual (paper) notifications (all classes) 75¢ 50¢
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Special ServicesExamples
Item Current Proposed
Certified Mail $2.40 $2.65
Express Mail Insurance ($100 to $200) $1.05 75¢
Return Receipt (paper copy) $1.85 $2.15
Return Receipt (electronic) $1.35 85¢
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Timeline
2006 2007
May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Governors Decision(March/April)
Implementation(May/June)
PRC Recommendation(Early March)
Litigation(May through March 2007)
Filing Date(May 3, 2006)
10 Months
1 Year