by Gretchen Littlefield, Moore CEO
It is a truth universally acknowledged that the most successful business strategy is higher prices plus worse service.
Wait a second: it’s actually the opposite!
And yet that’s the Postal Service’s new strategy. After a December with the worst delivery record in recent memory, USPS is looking to explode its pricing, potentially announcing postage increases of 6.6 to 8.6% as early as the end of this month that would go into effect 90 days later. These would be in addition to the increases that just happened in late January.
All told, they look to be increasing prices by 30%+ over the next five years in a time of almost no inflation.
They claim this is legal. It’s not. The Postal Accountability and Enhancement Act of 2006 says that price increases are tied to inflation.
They claim that this is necessary to meet their financial obligations. It’s not. The funding “crisis” at USPS is entirely a financial creation; if they used the pay-as-you-go system for retiree health care and pensions, their crisis would disappear instantly.
They claim that it would not harm mail volume. It will. Think of your direct mail program—you have a cost-to-acquire threshold where it is profitable for you to acquire a donor. If your costs went up by a third, fewer donors would meet that threshold and you’d mail less. It’s simple math. USPS would have less revenue and the same costs, since the mail person must go to a house whether they have one letter or five. So the price increase would be counterproductive for them.
More than that, it means fewer donors. Fewer donors mean less revenue, which means we can serve fewer people at a time when this nation needs our services more than ever.
That’s the message we’re hoping nonprofits can help spread. That’s why we need you.
I’m hoping you’ll email your federal representatives right now about this threat. And I’m hoping your organization will consider sending letters to your members of Congress; the TNPA has a template you can download here.
Because, as you know, a letter can do powerful things. Let’s keep it that way.
P.S. If you’d like, we are doing a free webinar about postal issues, including the potential price increase, on March 25th. Hope you’ll join!