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beat postal-rate increase

Prep work helps companies
beat postal-rate increase

“There has been some increase in interest in automation since the first of the year. They are looking for a way to save a little,” says Carl Johnsen, mail piece design analyst at the U.S. Postal Service Business Center in Henrietta.
Postal officials and local mailing services say many businesses do not take advantage of the reduced rates the postal service offers. Nearly any business can reduce its mailing costs with planning and extra work.
Faced with delivering more than 168 billion pieces of business-related mail each year, the postal service gives rate discounts to customers who perform tasks that otherwise would be performed by postal employees, such as sorting mail.
Johnsen lists two basic ways to reduce postage costs: first-class presort, a method of preliminary ZIP code sorting that lets one send mail out at 27.4 cents per piece. Second, businesses can use ZIP-plus-4 bar-coding, affixing a bar code to each piece of mail. This drops the cost to 25.8 cents per piece. Further sorting, into carrier routes, brings the cost to 25.4 cents.
“A lot of smaller mailers don’t know that they could save on postage. They also are unaware of the things they could do to maximize effective processing,” Johnsen says.
Companies can save a significant amount of money using either method. For instance, if a company sends 10,000 pieces of mail using ZIP-plus-4, it saves $620 over regular first-class-mail rates. There is, however, an annual fee of $85 for a first-class presort permit. In addition, the actual preparation of mail becomes more labor-intensive because it requires manual sorting.
Each business must determine whether the savings outweigh the extra labor in preparing the mail.
“We give the guidelines, but you make the decisions,” Johnsen says. “We direct you to everything you need, and we’re available to help you answer all of your questions.”
Companies that use direct mail, particularly in quantities of more than 200 pieces, can send it bulk third-class and cut mailing costs up to 20 cents per piece, depending on how the mail is sorted and its dimensions.
Johnsen says the typical third-class bulk letter for most area businesses would cost 16.8 cents (it will range from 12.2 cents to 22.6 cents). “It depends on the level of presorting and where it’s going.”
The third-class-mailing rate pays for up to 3.3 ounces. So a typical 2.5-ounce letter sent by first-class mail would cost 73.4 cents, but 16.8 cents by third-class bulk.
“If you are talking about heavy pieces, the savings can really be dramatic,” he says.
Another way companies can reduce their mailing costs is outsourcing the work to mailing companies. More than a dozen local companies specialize in presorting, automating, bar-coding and other services that reduce mailing costs.
Christopher Owens, president of Unimail Corp., says the company began 14 years ago by supplying clients with first-class, presorted mail. Unimail picks up the unmetered mail at a company, sorts it by ZIP code and puts an 11-digit bar code on each envelope. This reduces the cost of a first-class letter from 32 cents to 27.4 cents.
“(Customers) get a big savings and their mail gets delivered more consistently,” he says.
Unimail gets its fee by splitting the money saved with the client.
Owens says businesses can cut mailing costs by using third-class mail. This less expensive, but slower, delivery works best with mail that is not time-sensitive. He explains that working with a mailing service can ensure companies get the best rate–currently carrier-route-sorted, third-class mail–without the headaches of sorting mail and affixing route numbers or bar-coding.
Outsourcing postal operations can benefit large firms by eliminating labor costs and equipment, and by reducing rates. Smaller companies can get rid of postage meters, scales and other mailing equipment. Owens recommends attending seminars on cutting mailing costs put on by the Greater Rochester Postal Customers Council.
Business officials say mailing costs can be greatly affected by what is mailed and where it is sent. They recommend companies prune old, inactive or unproductive names from mailing lists, and verify addresses and ZIP codes.
Sheryl Voorheis, owner of Graphein mailing service, says the quality of a mailing list directly affects the postal costs.
“It’s very important to update and clean up your mailing list,” she says. Each incorrect or old address costs the company postage, material and labor.
She runs customers’ mailing lists through computer software that identifies problem addressing such as wrong street names, ZIP codes and other errors. Voorheis also recommends that companies design mailings that fit postal requirements for automation. Doing this will speed up delivery and save money, she says.
Some companies cut down on mailing costs by trying to eliminate items sent by mail. Technology offers electronic alternatives for some businesses.
Robert Barbato, director of the Small Business Institute at Rochester Institute of Technology’s College of Business and a management professor, says using facsimile machines represent a way small businesses can cut their mailing costs. E-mail, however, has not had a big effect on most small-business mailing costs.
“The fax is the big thing. There are not a lot of (small) companies hooked into the Internet. A lot of small businesses use fax machines at night to get the cheaper rate,” he says.
Another way small businesses cut mailing costs is to use postcards instead of letters for short announcements or reminders. This reduces the postage from 32 cents (non-presort) to 20 cents. It also eliminates the cost of the envelope and may reduce labor costs.
“Everybody is trying to find ways to save money,” he says.
For example, his own small business, USA Baby, a seller of baby furniture, started combining mailings with a franchise in Buffalo.
Unimail’s Owens says the growth of faxes and e-mail has not hurt his company or decreased the volume of mail.
“We’ve been growing. I’ve heard a lot about companies using e-mail and faxes. A lot of material can’t be sent by e-mail or by fax.” He explains that direct-mail advertising, paychecks and bank statements are examples of information sent by mail, not electronically. Those three types of mail make up the bulk of his company’s work.
Postal worker Johnsen oversees the service’s business center for the Rochester region. The center aims to help small- and medium-size businesses cut their mailing costs and improve their mailing efficiency. He explains that getting discounts initially may seem confusing because of the various sorting and size requirements.
Johnsen suggests businesses visit the business center located at the main post office at 1335 Jefferson Road.
Most businesses that use the center generate less than $100,000 worth of mail a year, he says. Staff provide free assistance to companies looking to cut costs or increase efficiency. The assistance includes mail piece design, information on mail-list-management services, and preparing bulk mailings.
Adds Owens: “Even with the (rate) increases, the U.S. Postal Service is the most cost-effective way to sell your products or services, or get paid for services you’ve already sold.”
Mike Dickinson is a Rochester-area free-lance writer.
Christopher Owens demonstrates Unimail machinery that inserts mail into envelopes, then seals and meters it.


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