Shaping a More Efficient Future Price Change Proposal

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Shaping a More Efficient FuturePrice Change Proposal

Mailers’ Technical Advisory Committee

Stephen M. KearneyVice PresidentPricing & ClassificationMay 17, 2006

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High-Level Goals Growth Efficiency Cost coverage Addressing Positioning for the

future

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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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PeriodicalsStrategy Encourage efficiency

– Containers– Drop ship

Simplify co-palletization rules

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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 ServicesStrategy More efficiency Streamline product offering

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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

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Thank YouQuestions?