Periodicals

Filed under Pricing & Rates  

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assorted periodicals old and new: The American Weekly Mercury, Common Sense, Poor Richard's Almanack, U.S. News, Newsweek, The Economist with background of pieces of type

Since the earliest days of the Post Office there has been a public policy goal of promoting the dissemination of information throughout the country. This goal was also part of all 14 of the rate cases conducted under the Postal Reorganization Act. By law, rates had to consider “the educational, cultural, scientific, and informational value to the recipient of mail matter.” This provision generally tempered the increases for Periodicals, or at least kept the “institutional cost burden” for Periodicals to a minimum. In fact, in the final rate case in 2006 before the new price cap system of the Postal Accountability and Enhancement Act took effect, the “markup” on Periodicals was only 0.2 percent. Periodicals prices were set so that revenue was only 0.2 percent above attributable costs. The average for all mail was 79.3 percent.

The two price adjustments since that final rate case have been capped by inflation. Under the old rate case process, the increases would have likely been greater so that the prices covered the Postal Service’s costs for handling Periodicals. In fiscal year (FY) 2008, Periodicals revenue did not cover costs. In fact, the cost coverage (the ratio of revenue to attributable costs) was only 84 percent. (In rate cases, the recommended prices had to be at least 100 percent of costs.) The new law includes the price cap as an incentive for cost containment, but also says products should cover their costs.

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So what do you think? Should the Postal Service try to increase Periodicals prices beyond the cap? What role do Periodicals play in the mailstream? What takes precedence: the cap or a requirement that products cover cost? Should the price for a flat that happens to be a magazine be significantly lower than the exact same flat that happens to be a catalog?

This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).

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Permalink | Comments (23) | Aug 17, 2009

 

 

23 Responses to “Periodicals”

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  1. 23
    Pearlyvi Says:
    July 19th, 2010 at 6:10 am

    Periodicals and magazines are important for information. We should figure out a way to increase the price on sale flyers and general junk mail. The majority of my mail is “junk” and goes straight into the trash. Car dealers should be charged double for advertising in though the mail. Also the weekly “coupon” mailing I get is useless.

  2. 22
    Kate Says:
    July 13th, 2010 at 3:01 pm

    It makes sense that a larger portion of the Postal Service’s costs are institutional. Also, as others have mentioned more of the manual handling should be automated.

  3. 21
    jrkakapastate Says:
    August 28th, 2009 at 4:44 pm

    Does the term “Lemonade”, mean anything to any of the OIG’s technical staff?
    Hint-Hint….
    Mobile Internet Applications i.e., Black-BERRIES, I mean mobile application PCD’s.
    (PCD-Personal Communication Device)
    I mean wireless apps…. inferred as paperless media..
    Consider the electronic medical records (EMR)
    a reality within 24 months. (est.)
    Of course, Congress must first approve any current
    legislation.
    Also, lets look at the facts 08/29/09 “I-Phone
    sales increase 34 million units 3rd qtr. 2009.”

    Lastly is the issue of transportation assets during
    an emergency event or disaster. While I was at FEMA,
    then developing response plans, my first inclination was to identify vehicles under the government umbrella which could serve the response during an
    event.
    Hoping I’m not off track here…. But, we are talking about fleet assets which presumably, are integrated into the intelligent transportation system network already, right?

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