Pricing and Price Caps
The Postal Accountability and Enhancement Act of 2006 (PAEA) changed the way the Postal Service sets rates. It divided postal services into two broad categories: market dominant (mailing services) and competitive (shipping services). Market dominant products constitute about 90 percent of postal revenue. They include First-Class Mail, Standard Mail, Periodicals, and some Package Services. Products such as Priority Mail, Express Mail, and bulk Parcel Post are considered competitive. The PAEA placed a cap on price increases for market dominant products. The Postal Service is now permitted to make annual price changes after limited review by the Postal Regulatory Commission, but the average increase for each class of mail cannot be greater than the rate of inflation as measured by the Consumer Price Index for All Urban Consumers (CPI-U). The Postal Service can request a rate increase above the cap due to extraordinary or exceptional circumstances.
Read MoreRunning a Summer Sale
Sale is not a word usually associated with the Postal Service, but there is a first time for everything. Mail volume has dropped significantly this year, and the Postal Service is proposing a “Summer Sale” to encourage mailers to send more Standard Mail. The Postal Service believes it can use its excess capacity to deliver the additional mail volume at a relatively low cost.
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