February 1, 2011 USPS MAILING SERVICES

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1 February 1, 2011 USPS MAILING SERVICES BACKGROUND INFORMATION: Upon the Postal Regulatory Commission s approval, new USPS Mailing Services prices take effect April 17, Mailing Services include First-Class Mail (FCM), Standard Mail, Package Services (Media Mail, Library Mail, Bound Printed Matter, Parcel Post ), Periodicals and Extra Services. Pricing for Shipping Services products (Priority Mail, Express Mail ) is based on a price floor, whereas, pricing for Mailing Services products are limited to a price ceiling. Mailing Services price increases are limited to the Consumer Price Index (CPI) cap of 1.7 percent, consistent with the Postal Law of Actual percentage price increases for various products and services will vary and are noted below. The largest areas of potential impact include FCM Flats, and Standard Mail parcels and Not Flat-Machinables. This Customer Connections will provide general information relative to some of the Domestic Mailing Services changes. Specific information relative to Pitney Bowes product capabilities as it relates to these proposed changes will be communicated at a later date. PROPOSED CHANGES: 2011 Proposed Price Changes by Mail Class Class Percent Change First-Class Mail 1.741% Single-piece letters & cards 0.461% o Postcard ~ from 28 to 29 o Additional ounce ~ from 17 to 20 o No change to 1-ounce letter Presort letters & cards 1.796% Flats 5.343%* o Additional ounce ~ from 17 to 20 Parcels 3.753% International 3.974% *Most of the 5.3% increase to single-piece FCM flats is due to 17.6% increase in the additional ounce price, from 17 to 20 cents as noted below. Note, there will be no change relative to additional ounce price for retail parcels (remain 17 ), commercial letters (remain 12.5 ), commercial flats and parcels (remain 17 ) Standard Mail 1.739% Letters 1.8% Flats 0.8% Parcels & Not Flat-Machinables 11.3% Periodicals 1.741%

2 Package Services 1.740% Single-piece Parcel Post 1.807% BPM Flats 0.707% BPM Parcels 1.982% Media Mail, Library Mail 1.964% Extra Services 1.740% Service Current Proposed Annual Presort Fee $185 $190 Certificate of Mailing $1.15/piece; $ no change Certified Mail $2.80 $2.85 COD 0.01 to $50.00 $5.50 $5.75 Delivery Confirmation $0.19 electronic (free PM*) no change $0.80 retail ($0.70 PM*) no change *Priority Mail Signature Confirmation $2.35 retail $2.45 $1.95 electronic $2.05 Insurance $1.75+ $1.80+ Registered Mail $ $ Restricted Delivery $4.50 no change Return Receipt $1.10 Electronic $1.15 $2.30 Mail no change $4.60 after mailing $4.70 RR for Merchandise $3.80 $3.85 Special Handling $ lbs. and under $7.55 $10.40 over 10 lbs $10.60 First Class Mail (FCM) Parcels There are two key changes to FCM parcels, the rating structure and the introduction of new commercial pricing categories. Rating Today, FCM pieces are charged per ounce or fraction thereof; any fraction of an ounce is considered a whole ounce. For example, if a piece weighs 1.2 ounces, the weight (postage) increment is 2 ounces. Under the proposal, the first three ounces in each FCM parcel pricing category will be a single price cell. In other words, for each price category, parcels weighing from 0 to 3 ounces will all pay a single price. The minimum postage per parcel is that for a 3- ounce parcel. The additional ounce price of 17 cents would apply after the first three ounces. Pricing Categories Currently, there are two price categories for FCM parcels, Retail and Commercial. Single FCM parcels pay retail prices. Mailers that meet preparation and minimum volume requirements (e.g., 500 pieces) may qualify for commercial (discounted) prices. Under the proposal, the USPS is introducing two new pricing categories for FCM parcels ~ Commercial Base and Commercial Plus.

3 FCM Commercial Base Parcels Qualifying payment methods Permit imprint* IBI (Information based indicia) meters** PC Postage *A permit imprint may be used for mailings of non-identical weight pieces only if authorized by Business Mailer Support. ** For presorted parcels, IBI postage meters electronically transmit transactional data daily to USPS Required inscription Except for parcels paid for by permit imprint, presorted and single-piece parcel prices parcels must be marked CommercialBasePrice or ComBasePrice in addition to the First-Class Mail marking Presorted parcels must also be marked Presorted (or PRSRT ) First-Class Mail Volume requirements Single-piece ~ no minimum unless paid with Permit Imprint which requires a minimum of 200 pieces or 50 pounds Presorted prices, e.g. ADC, 5-digit, 3-digit ~ minimum 500 pieces Dimensional requirements ~ Length Height Thick Weight Minimum: n/a Maximum: oz. Barcode requirement Presorted parcels, except those prepared in 5-digit/scheme containers, are subject to a $0.05 surcharge if any of the following characteristics apply: o Parcels do not bear a GS1 128 or Intelligent Mail package barcode o Parcels weigh less than 2 ounces or are irregularly shaped, such as rolls, tubes, and triangles. Mailers can reduce their postage spend for single-pieces by 15 per parcel when using a qualifying payment method:

4 FCM Commercial Plus Parcels This new category is designed for parcels over 13 ounces but less than 16 ounces, although the pieces may weigh as little as 3.5 ounces. Note, the maximize weight of FCM in general is 13 ounces. Pieces weighing more than 13 ounces are subject to Priority Mail prices. However, under this pricing category, FCM Commercial Plus parcels may weigh up to (but not including) 16 ounces! Qualifying payment method Permit imprint*, using the Electronic Verification System (evs ) or electronic postage statement with a computerized manifest *A permit imprint may be used for mailings of non-identical weight pieces only if authorized by Business Mailer Support. Required inscription CommercialPlusPrice or ComPlsPrice Volume requirements Customer commitment agreement* to mail more than 5,000 FCM machinable parcels at commercial plus prices in a calendar year, and Single-piece ~ 200 pieces or 50 pounds Presorted prices, e.g. ADC, 5-digit, 3-digit ~ minimum 500 pieces * Customers may contact their USPS account manager or the manager of Shipping Support (see DMM 608.8) Dimensional requirements ~ Parcels must be machinable (with a minimum weight of 3.5 ounces) Length Height Thick Weight Minimum: > 3.5 oz. Maximum: < 16 oz. Barcode requirement Presorted parcels, except those prepared in 5-digit/scheme containers, are subject to a $0.05 surcharge if they do not bear a GS1 128 or Intelligent Mail package barcode Pricing A flat commercial plus price is charged at a single-piece price and each of the presorted price levels. In other words, FCM commercial plus parcels pay one price per sortation level, regardless of weight (minimum weight of 3.5 ounces up to less than 16 ounces per parcel). 1 $0.05 surcharge applies if not barcoded 2 ADC, 3-Digit and 5-Digit ~ min. 500 pieces per mailing pieces or 50# min. per mailing Understanding that restrictions apply relative to FCM PLUS parcels (i.e., annual and per mailing volume commitments) the sweet spot for this new category is FCM parcels exceeding 13 oz., and of course, less than 16 oz., as then the package would be rated at Priority Mail prices. This information below compares the single-piece commercial FCM BASE parcel price to that of FCM PLUS price and that of Priority Mail Commercial BASE price (flat-rate envelope and then also a 1-pound package not in a flatrate envelope): First-Class Mail Single-Piece Commercial Base Parcel ~ weight 13 oz. $3.26 First-Class Mail Single-Piece* Commercial Plus Parcel ~ > 3.5 oz. but < 16 oz. $3.89 Priority Mail Commercial Base Package ~ 1-pound package Zones 1 8 $4.80 to $5.83 Flat-Rate Envelope $4.75

5 STRATEGIES While the most significant increases apply to First-Class Mail flats, Standard Mail parcels and Not Flat- Machinables, mitigating postage increases in general includes the re-design of mailpieces, i.e. parcels to flats, flats to letters, and implementing solutions to prepare mailings at automation prices. Leveraging technology to gain delivery information of mailpieces and packages electronically may not only reduce fees, but also improve processes and enhance communications. Use of the electronic options of Delivery or Signature Confirmation service, or electronically-filed Certified Mail with electronic Return Receipt as alternatives to the traditional Certified Mail or Certified Mail with the green card Return Receipt may serve as cost-saving options in many applications. The proposed prices can be downloaded via Postal Explorer Click on the link in the left blue navigation frame under *New* April 17, 2011 Pricing Information. Upon PRC approval, a new Notice 123 Price List will be posted to Postal Explorer as well. Contents of website subject to change. Please watch for additional information, strategies and tools from Pitney Bowes. Elizabeth Lombard CMDSM, CMDSS, MDC, MDP, EMCM Certified Mailstream Consultant (CMC) Gold Level Manager, Certifications and Postal/Carrier MSM Learning & Performance, Pitney Bowes Inc. elizabeth.lombard@pb.com Every connection is a new opportunity The Corporate logo and Pitney Bowes are trademarks owned by Pitney Bowes Inc. USPS, Express Mail, Priority Mail, First-Class Mail, Standard Mail, Media Mail, Parcel Post, PC Postage, Delivery Confirmation, Signature Confirmation, Certified Mail, Intelligent Mail, IM BC, POSTNET, BRM, Business Reply Mail and DMM are trademarks owned by the United States Postal Service.