Is Postage Too High? Well, Yeah, But…
March 29, 2024   Dave Lewis

It doesn’t take great industry insight to know that postage is going up and has been for quite a while.   When our current Postmaster General took the reins of the Postal Service in 2020, he shared his belief that postage prices had been held artificially low by a flawed rate cap mechanism and a self-serving mailing industry.  It did seem that postage increases had been modest for a few years.  So, was he correct?  Was postage too low?


In 2006, a one-ounce First-Class letter required one 41 cent Forever Stamp to mail.  14 years later, in 2020, when Mr. DeJoy joined the Postal Service, that same badly named Forever Stamp cost 55 cents, an increase of 34%.  During that same time, the overall cost of living had increased 28%.  Postage had indeed grown more than overall inflation.  Another cost measure, the price of paper had risen just 16.7% in the same time span.

Because this is a free newsletter, and I am not an economist, I am oversimplifying a bit – the price of a First-Class stamp is not an absolute measure of overall postage rates, and there are a variety of measures of the cost of living and paper prices.  That notwithstanding, I think these measures are close enough to conclude that mailers weren’t running out the door giggling, because they had gotten away with an unfairly great deal.  Postage had at least kept up with inflation, and then some.

“But wait, Dave,” the Postmaster General might say to me.  (Unlikely, but he might say that to me.)  “Regardless of competing price escalations, the Postal Service was bleeding money when I arrived because they weren’t charging enough to cover their costs.”

A surprising argument from a supply-side advocate, ergo: lower taxes generate greater tax revenues, and higher taxes vice versa.  The Postal Service was not losing its shirt because postage was too low.  I think it is fair to say that they were losing money because:

  • Congress heaped all kinds of non-operational costs on USPS as part of the PAEA “Postal Reform” bill of 2006 – pre-funded retirement, and health benefits, among others.
  • The Universal Service Obligation (USO) requires the Postal Service to provide all kinds of services that are money-losers by definition.
  • Congress (there they are again) forces USPS to keep open offices that serve no business purpose.
  • Very powerful labor unions keep continual pressure on operational costs.
  • The Postal Service is just not very efficient.

All those things are very hard to fix – but raising prices is easy.  You just have to do it.  And so, they did.

Since 2020 we have seen plenty of postage increases.  That same stamp that cost 41 cents in 2006 is 68 cents today, an increase of about 66% - and will likely cost 73 cents in July, bringing that overall increase since 2006 to 78%.  In this same period, the cost of living will have increased about 55%.

So, is postage too high?  Yeah.  But what are you going to do about it?

Very little marketing or fundraising worth doing is free.  Even when the media is free, like a posting on Facebook or Linked In, there is a requirement to keep it updated and timely – generally a significant investment in time or staff.  “Investment” is the operational word here.

Paid advertising on the web, by the way, has risen far faster than postage.

Return On Investment – ROI – requires investment…no I and you get no R.  Direct Mail continues to show the highest ROI in direct marketing among competing channels.  Direct mail has some unique advantages that other channels cannot provide:

  • Targetability – Direct mail allows you to target your best audience with precise and accurate lists.
  • Exclusivity – How many emails do you get a day?  How many ads do you see on the web?  Now, how many pieces of mail in the mailbox?  Your postal mail will at least get a glance.  The rest is up to you.
  • Tactile impressions – People like touching stuff.

I could go on.  You need the mail, and you know it.  Fundraising in particular has no way of replacing it.  So, it costs more.  Here are a couple things you might do:

  • Minimize waste – Clean your list.  There are a lot of tools – NCOA, ACS…and more.
  • Coordinate other channels – multichannel beats monochannel every time.
  •  Participate in Postal promotions.
  • Try the credit card trick – Ask your donors to kick in a couple extra bucks to help with the rising cost of postage.
  • Consider using Marketing Mail where you currently use First-Class, if allowable.

Yes, postage is too high, and the current PMG seems unlikely to take his foot off the gas for the next few years.  Still, direct mail remains an irreplaceable channel.  Mail smart, but for goodness sake, keep mailing.