Ann Daley Vice President, Government & Regulatory Affairs, Pitney Bowes Alison Hall Director of Client Services – Direct Mail Solutions, Pitney Bowes January 15, 2014

USPS® Price & Regulatory Changes – What You Need to Know!

Agenda

WHAT’S INSIDE Background

Highlights

The Details

Promotions

Intelligent Mail® Barcode

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Mailing and Shipping Prices are Changing January 26th

1.Consumer Price Index-Urban (CPI-U) Price Proposal Average price increase of 1.7% Full Service IMb still required to get the Full Service incentives but NO

loss of automation discounts

2.Exigent or Above-the-Cap Price Proposal Approved but it’s a temporary surcharge Generally across-the-board increase of 4.3% Rolled back in less than two-years

3. Shipping Prices increasing an average of 2.4%

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Background

1.7% CPI + 4.3% temporary surcharge = 6.0% average increase

Classes of Mail Affected

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Mailing First-Class Mail® Single-Piece Letters & Cards Presort Letters & Cards Flats Parcels Outbound Single-Piece International Standard Mail® Letters Flats Parcels High Density/Saturation Letters Every Door Direct Mail Retail Parcels

Package Services Bound Printed Matter (BPM) Flats BPM Parcels Media, Library Mail Alaska Bypass Periodicals

Special Services

Shipping Priority Express Priority Parcel Select Lightweight Parcel Select Parcel Return Service Bulk International

Shipping Services average increase of 2.4%

Priority Mail Express delivery by 10:30 a.m. for an extra $5.00

Priority Mail products qualify for free insurance up to $50 or $100

Significant discounts for commercial parcels continue Volume requirements lowered for Priority Mail Commercial Plus from

75,000 to 50,000 pieces annually Intelligent MailTM package barcode (IMpb) required– $.20 fee on

commercial parcels lacking IMpb

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Shipping Services Change Highlights

Retail First-Class Single-Piece one-ounce letter increases to .49 cents

New First-Class Mail® letter price category to be called “Metered Mail” − 1 cent less than First-Class Single-Piece

Changes to residual First-Class Mail letters price structure

The USPS® continues to price AADC and 3-Digit Letters and Cards at the same level

Second-ounce free continues for all Presort First Class Mail letters (Non-automation and Automation)

Intelligent Mail® barcode $.003 incentive maintained No loss of automation discounts

First-Class Mail® Change Highlights

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Flat Sequencing System (FSS) preparation will be required in Destination FSS (DFSS) zones

Standard Flats − $0.001 per piece discount for pieces on DFSS-entered

scheme pallets

AADC and 3-Digit Presorted Letters will continue to be priced the same

− Presorting requirements are NOT changing

Intelligent Mail® Barcode $.001 incentive maintained

Simple Samples – No increase in the price of Simple Samples

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Standard Mail® Change Highlights 1

Customized Market Mail reduced from $.046 to $.044

New prices for EDDM – Commercial − $0.151 to $0.203, based on entry point

EDDM Retail – price increasing to 17.5 cents

Proposing to disallow use of detached address labels (DALs) with all Standard Mail flats mailed with simplified addresses (EDDM); therefore, all EDDM flats entered at BMEUs or Retail would have to bear simplified addresses directly on the flats

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Standard Mail® Change Highlights 2

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Special Services Change Highlights 1

Certificate of Mailing New Prices

Basic $1.30

Firm Book Mailing 0.47

Bulk: First 1,000 pcs 7.80

Each Add’l 1,000 pcs 0.95

5-Digit 0.451

Certified Mail $3.30

Return Receipt

Requested at time of mailing

Electronic $1.35

Green Card 2.70

Merchandise 4.40

Requested after mailing 5.25

Special Services Change Highlights 2

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USPS Tracking New Prices

First Class Mail (Parcels Only) Retail $1.05

First Class Mail (Parcels Only) Electronic 0.00

First Class Package Service Electronic 0.00

Priority Mail Retail 0.00

Priority Mail Electronic 0.00

Standard Post Retail 0.00

Standard Mail Parcels Electronic 0.23

Package Services Retail 1.05

Package Services Electronic 0.23

Parcel Select Electronic Electronic 0.00

USPS Tracking New Prices

Electronic $2.35

Retail 2.90

FSS preparation will be required for Periodicals mailed in DFF Zones

FSS pricing at the bundle level, sack level, and pallet level will be introduced at all entry points

Full-Service IMb® incentive maintained

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Periodicals Change Highlights

FSS pricing to be introduced for BPM Flats

FSS price categories introduced for presort at originating entry, DNDC entry, DSCF entry, and DFSS entry, as well as carrier route presort at originating entry, DSCF entry, and DFSS

No FSS pricing for DDU destination entry

FSS pricing incentives for BPM flats may be introduced after January 2014

Eliminates $0.03 POSTNET barcode incentive for BPM Flats

Retains $0.001 Full-Service IMb incentive for BPM Flats

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Package Services Change Highlights

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Key Details

Letters (1 oz.) $0.49

Letters additional ounces $0.21

First –Class Mail® International Global Forever Stamp (1 oz.) – $1.10 to $1.15

First Class Postcards $0.34

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First-Class Mail® Retail

Price

change

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Key First-Class Mail® Single-Piece Prices

Current

Price

New Price

Stamp Price 0.46 0.49

Meter Price 0.46 0.48

Single-Piece Flats 0.92 0.98

Single-Piece

Cards 0.33 0.34

Retail Parcels 2.07 2.32

Save 1¢ on First-Class letters that have postage affixed using: Postage Meter PC Postage Permit Imprint Pre-canceled stamps

No piece minimums No preparation requirement No requirement to report those pieces on a postage statement

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NEW: First-Class Meter Rate

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The new price category will be based on incremental weights up to 3.5 oz. Metered pieces claiming the new “Meter Price” will have postage applied

directly to the pieces, and will be deposited as “Retail mail”.

First 3 ounces in each FCM parcel category still a single price cell

$.18 additional ounce price after 3 ounces

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First-Class Mail® Retail Parcels

Oz. Current New

1 2.07 2.32

2 2.07 2.32

3 2.07 2.32

4 2.24 2.50

5 2.41 2.68

6 2.58 2.86

7 2.75 3.04

8 2.92 3.22

9 3.09 3.40

10 3.26 3.58

11 3.43 3.76

12 3.60 3.94

13 3.77 4.12

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First-Class Mail® Commercial Letters

Current

Price

New Price

Mixed AADC

Automation Letters 0.405 0.435

AADC Automation

Letters 0.384 0.406

3-D Automation

Letters 0.384 0.406

5-D Automation

Letters 0.360 0.381

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First-Class Mail® Commercial Flats

Current

Price

New Price

Machinable

Presort 0.772 0.815

Mixed AADC 0.740 0.782

AADC 0.640 0.691

3-Digit 0.594 0.634

5-Digit 0.406 0.451

0.208 each additional ounce

Mailers may continue using current preparation standards Residual 1oz and 2oz pieces presented in

the same tray receive the blended price on those pieces

NEW: Mailers have the option of separating out 1oz and 2oz pieces and paying the lower metered rate

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Commercial Residual Single-Piece

Letters: Two Options

Weight Not

Over (ounces)

CPI CPI+E

1 $0.46 $0.48

2 $0.66 $0.69

Blended $0.48 $0.50

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Key Details

Standard Mail®

Mandated Flat Sequencing System (FSS) Preparation Requirements

Flat mail going to ZIP Codes served by the FSS will require specific ways to sequence, bundle, and place mail on pallets and will be different from current methods

FSS preparation will be different when mailing at non-FSS areas

New FSS pricing Introducing FSS Facility and FSS Scheme pricing for

High Density, High Density Plus and Carrier Route Flats. $0.044 difference between Origin and DFSS Scheme

USPS to offer a $0.001 per piece discount off the DSCF price for those pieces brought to a DFSS in scheme bundles on a DFSS scheme pallet

The discount is an incentive for mailers to enter the mail at a plant where there is an FSS machine

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Standard Mail®

Flats

Sequencing

System

Simple Samples allows you to send trial-sized products to your customers No increase in price Induct mail without unnecessary outer packaging Lower prices offered for higher-volume tiers

Price reduction for Customized Market Mail from ($0.46 to $0.44)

New prices for Every Door Direct Mail (EDDM) – Commercial: EEDM Saturation Flats is $.001 less than other Saturation Flats

EDDM Retail moves to Market Dominant List – price increasing from $.16 to $.175

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Standard Mail®

Saturation and High Density Incentive

Encourage existing mailers to increase mail volume by rewarding them with a rebate on incremental mail pieces above a predetermined volume baseline Commercial Saturation Mail eligible for 20% rebate Commercial High Density Plus and High Density Mail eligible for 15%

rebate Rebate provided as a credit in the postage account in early 2015

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Standard Mail® Incentive

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Key Standard Mail® Prices

Current

Price

New Price

Letters (5-D Auto entered at Origin)

0.247 0.261

Flats (5-D Auto Flat entered at Origin)

0.362 0.386

Carrier Route (Flat entered at Origin)

0.279 0.295

High Density/Saturation

Letters (Saturation Letter entered at Origin)

0.189 0.198

High Density Saturation

Flats (Saturation Flat entered at Origin)

0.201 0.211

EDDM-Retail 0.160 0.175

Mobile Technology Promotions Encourages mailers to integrate direct mail with mobile technology using best practices in mobile marketing

Branded Color Mobile Technology Emerging Technology Featuring NFC Promotion Mail Drives Mobile Commerce Promotion

Technology Drives Relevance Leverage the value of innovative direct mail techniques that are less widely used, but have been shown to increase effectiveness of mail campaigns

Color Print in First-Class Mail Transactions Promotion Mail and Digital Personalization Promotion

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Promotions Overview

Leverage Value of First-Class Mail Intended to slow the volume decline in First-Class Mail by ensuring reply mail, transactional mail and First-Class advertising remain a relevant part of the First-Class Mail marketing mix

Premium Advertising Promotion Earned Value Promotion

New Customer Acquisition Provides an extra incentive for new customers to try direct mail EDDM Coupon Promotion

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Promotions Overview

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Promotions Details

The USPS announced December 27, 2013, Full Service Intelligent Mail® requirement for automation discounts is DEFERRED indefinitely for:

Postcards (First-Class Mail® only) Letters, and flats when mailed using: First-Class Mail® Standard Mail® Periodicals®

Flats mailed at Bound Printed Matter® prices

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Full Service IMb®

Though the requirement has been

deferred for automation prices, IMb

Full-Service mailings MUST still

comply with mailing standards, as

published April 18, 2013 Federal

Register Notice (FRN), to be eligible

for the IMb Full Service Discount.

$.003 for First-Class Mail®

$.001 for Standard Mail®;

Periodicals®, and Bound Printed

Matter®

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Full Service IMb® effective January 26, 2014

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IMb® Requirements

FULL-SERVICE

Intelligent Mail® barcode on mailpiece x

Unique serial number in barcode* x

Intelligent Mail® barcode on trays and containers x

Electronic Documentation (e-Docs) submission x

FAST® Appointment Scheduling x

*Small mailings (fewer than 10,000 pieces) can use the same serial

number for all pieces, if: • Postage is affixed to each piece at the correct price OR

• All pieces are of identical weight and separated by price

Additional information on Full-Service requirements can be found on:

http://www.pb.com/Postal-Information/Intelligent-Mail-Barcode/

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Full Service IMb

How will USPS measure quality and what are the

consequences?

• Current Verifications

• New Validations - January 26, 2014

• Ensure mailings comply with IMb Full Service requirements

as noted in FRN April 18, 2013

• Compliance needed to maintain Full Service IMb discounts

• eDoc verifications implemented

• By/For requirement will be verified in the eDoc verifications

• Postage Adjustments - July 27, 2014

• USPS plans to implement verification assessments for

additional postage for non-compliance beginning July 1.

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Full Service Verifications Today

• Automation Verification – Existing Verifications

Mailpiece preparation including dimensions, shape, weight, and flexibility

Barcode quality

Content

Presort makeup

Automation eligibility

• Existing Thresholds Apply

• Mailing Falls Below Thresholds

Returned for Rework

Additional Postage at the applicable rates in January

Examples:

o Poor Barcode quality = % of pieces at Non-Automation Rates

o Poor Presort quality = % of pieces at FCM Single Piece Rates

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Full Service Verifications Today • Full-Service Acceptance - Existing Verifications

• Documentation not submitted electronically

• Container placards are inside or covered by shrink-wrap

• No Intelligent Mail container barcodes on the container placards oInitial Sample = 1 Container

oIf in error, select additional 3 containers

oMore than 2 total errors = Failure

• No Intelligent Mail tray barcodes on the tray/sack labels oInitial Sample = 3 Handling Units

oIf one or more in error, select additional 3 Handling Units

oMore than 3 total errors = Failure

• No Intelligent Mail tray barcode on the mailpieces oInitial Sample = 30 Mailpieces

o4 or more in error = Failure

• Mailing Falls Below Thresholds oReturned for Re-work

oAdditional postage at the non-automated rates in January

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• Full-Service Electronic Verification - New Verifications

• Validation of the Information contained in eDoc

• Data is aggregated over a one-month period

• Displayed in the Mailer Scorecard by CRID

• Develop reasonable thresholds

• Within 48 hours after the eDoc is processed the following

occurs:

• Full-Service eDoc verification

• Check every container, handling unit and piece in electronic

documentation and evaluate for specific errors

• Trend results are monitored for at least one month

Full Service New Validations –

January 26, 2014

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Full Service New Validations - January 26, 2014 • All validations are performed by checking against values provided in the eDoc

Validation What is it?

Mailer ID Mailer ID provided in the IMb, IMtb, or IMcb is valid and registered with the USPS Mailer ID system

Service Type ID Service Type ID provided in the IMb is valid, appropriate for the class of mail, and appropriate for the service level of the mailpiece

By/For Mail Owner and Mail Preparer are provided for each mailpiece

Unique Container Barcode

IMcb is unique across all mailings from all eDoc submitters for the past 45 days

Unique Tray Barcode

IMtb is unique across all mailings from all eDoc submitters for the past 45 days

Unique Piece IMb is unique across all mailings from all eDoc submitters for the past 45 days

Co-Palletization Co-palletization files are submitted within 14 days for trays/virtual sacks marked for co-palletization at origin

Entry Facility Entry facility provided in eDoc (Locale key or ZIP Code) is a valid USPS facility

Scheduled Ship Date

For USPS Transported containers that do not receive scan at arrival to USPS facility, scheduled ship date/time is within 48 hours of finalization date/time.

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The Mailer Scorecard

• The Mailer Scorecard provides a dashboard view summarizing

performance

• Allows comparison across facilities

• Conditional formatting provides a trending view across months

• Drill reports provide a way to determine specific mail preparation

errors

• Available for any company that submits electronic documentation

• Data grouped by eDoc submitter CRID

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Mailer Scorecard User’s Guide - https://ribbs.usps.gov

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Full Service Mailer Scorecard (Available today)

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Full Service Thresholds

• USPS will establish and publish thresholds during the first

six months of 2014 based on a statistical analysis of

actual mailer quality.

• Example thresholds can be found in the scorecard

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Full Service Postage Adjustments –

July 27, 2014

• eDoc evaluation based on monthly average

• Not individual mailings

• Postage adjustments occur if a particular error is over the

threshold

• Number of pieces in error times the difference between postage

affixed and the presort rate

• Example: 10,000 piece mailing with 11% error while

threshold is 10% and postage claimed is $.36.

• 1,100 pieces in error X (.433-.36) = $80.30 Additional postage

due

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Full Service Postage Adjustments - July 27, 2014

Invoice Generation Timeline

• All postage assessments will be performed at the eDoc Submitter CRID level

• Mailers will have 10 days to review the invoice and all mail preparation errors:

During this period of time, mailers can elect to dispute errors

If contested, invoice will be placed in a dispute queue report made available

externally

End of Invoicing

Period

(Month End) Invoice

Generation

10 Days

Pay/Dispute

Invoice

VAE Verification

Assessment Evaluator

10 Days

Update/Reject/

Close Dispute

BMS Reviewer

5 Days

Pay Invoice

VAE

3 Days

If unpaid, invoice will be

marked as overdue

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Full Service Intelligent Mail Resources

• Intelligent Mail Services

Email: IntelligentMailSupport@USPS.GOV

Web: https://ribbs.usps.gov

Phone: 800-522-9085

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https://ribbs.usps.gov

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Full-Service Intelligent Mail® Webinar Series

https://ribbs.usps.gov/index.cfm?page=intellmailpresentations

Intelligent Mail Package Barcode (IMpb) is required January 27, 2014 Required to continue to claim presort or destination entry prices, except

Standard Mail. Required for tracking and Extra Services barcodes, and all First-Class

Package Services, Parcel Select, Parcel Select Light Weight, Bound Printed Matter, Media Mail and Library Mail parcels. * Required for end to end tracking including confirmation of delivery at no

charge. *

*Track packages through the Product Tracking System. See https:\\ribbs.usps.gov for more details.

Full Service IMpb Requirements January 27, 2014

Although temporary, the price increase is 6%

My budget is already set for 2014!

Are there any options to reduce my costs?

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Options to Mitigate Postage Increase

• NEW! Metered Mail Rate saves $.01

•Use Meters or pbSmartPostageTM instead of stamps for small offices and departmental mail

• Commercial Base Pricing offers discounts for Priority Mail®, Priority Mail Express™ or First-Class™ Package Service

• USPS Flat Rate offer one rate no matter the weight or where the package is shipping

• Choose Parcel Select over Standard Post

pbSmartPostageTM , or other PC

postage options, can save $$

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Options to Mitigate Postage Increase

• Mail piece Design captures savings!

•Make sure mail piece is automation compatible for best postage save

•Fold flat size mail contents in half to 6x9 envelope to qualify for letter size postage price . Save 50% or more

•Save at least 30% using Postcards

• Consider Standard Mail for non personal mailings for savings over $.10 per piece

• Cleanse Database for address accuracy and move updates

•See your local PB rep for more information

• Postage Optimization for additional mail streams

•See your local PBPS facility contacts for postage analysis today

*postage save estimated with single piece rates

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Options to Mitigate Postage Increase

Ann Daley Vice President, Government & Regulatory Affairs, Pitney Bowes ann.daley@pb.com

Alison Hall Director of Client Services, Direct Mail Solutions, Pitney Bowes alison.hall@pbpresortservices.com

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Questions?

THANK YOU.

For More Information:

http://www.pb.com/postal-information