Price Change 2017 January 2017

Price Change Overview Market Dominant First-Class Mail® USPS Marketing Mail® Periodicals® Package Services Extra Services Promotions Informed Delivery Competitive Price Change

Total average increase of ~0.871%* on Market Dominant products The Price Cap CPI: 0.871% Based on Consumer Price Index PRC formula uses a moving average of CPI data* All classes had varying degrees of banked authority** *Note: Cap authority is cumulative for the entire period when it has been more than 12 months since the last price change **Note: First-Class and USPS Marketing Mail have less CPI Cap due to promotions filings, Retail Parcels 0–3 ounce price increase in August, and First Class Mail International Inbound UPU rates.

Share Key Concepts with MTAC Jul 12 - 13 Key Activity Date Share Key Concepts with MTAC Jul 12 - 13 Share Technical Changes and Draft Postage Statements with Developers Aug 11 Share Draft Mailing Standards with Industry File Market Dominant Prices with PRC File Competitive Prices with PRC Oct 12 Oct 19 PRC Approved Market Dominant Prices (except Special Services) PRC Approved Competitive Prices Nov 15 Nov 18 Publish Final Prices and Standards Dec 9 Implementation of New CPI Prices Jan 22 Responded to industry feedback to share changes earlier in process *Note: Move Update filings are TBD DISCUSSION DRAFT

Full Service IMb Incentives Remain in Place First-Class Mail $0.003 Marketing Mail $0.001 Periodicals $0.001 BPM Flats $0.001 Full Service incentives remain in place

First-Class Mail ~0.8% overall increase First-Class stamp price moves to 49 cents Product CPI Percent Change Single-piece Letters & Cards 2.0% Single-piece Metered -1.1% Flats 1.9% Parcels 0.6% Presort Letters & Cards -0.3% First-Class Mail International* (includes letters, cards, and flats) 0.0% FC Single Piece – back to exigent price Metered Mail – three cent gap between Single Piece and Metered price Flats – two times the price of Single Piece which allows consumers to apply two stamps International Inbound prices set by UPU * Does not include International Inbound 6

Key First-Class Mail Single-Piece Prices Current Price New Percent Change Stamp Price 1 Oz. 0.47 0.49 4.3% Single Piece Additional Ounce 0.21 0.0% Meter Price 1 Oz. 0.465 0.46 -0.1% Single-Piece Flats 1 Oz. 0.94 0.98 Single-Piece Cards 0.34 Retail Parcels 0-4 ozs. 2.62 2.67 1.9% Retail Parcels – raised by five cents

Key First-Class Mail Bulk Prices Current Price New Percent Change Mixed AADC Automation Letters 0.419 0.423 1.0% AADC Automation Letters 0.399 0.403 5-Digit Automation Letters 0.376 0.373 -0.8% 5-D Automation, discount expanded from 2.3 to 3.0 cents, pass through is now 84% * Note: AADC to 5D Discount expanded from 2.3 cents to 3.0 cents, now an 84% pass-through.

First-Class Mail International No increase at this time Product CPI Percent Change Letters 0.0% Flats Cards No changes to internal outbound * Note: First-Class Mail International Global Forever Stamp remain $1.15 9

Market Dominant Classification Changes First-Class Eliminate 3-Digit Automation Letters for First-Class Presort Prices have been the same since 2012 Combines the 3 Digit (L003) and AADC (L801) into the L801 AADC sortation 3 & 3.5 Ounces free for First-Class Commercial Letters One price for all commercial letters up to 3.5 ounces Provides the ability to add content to bills and statements Alternate Postage rebranded as Share Mail One price tier Marketing agreements no longer required Both static and serialized  IMb’s allowed Included in 2017 Earned Value promotion.  For Simplification Purposes the USPS is combining 3 digit and automated area distribution center (AADC) presorts into “AADC” presort level for commercial First-Class Mail Letters and Cards and Standard Mail letters. Mail preparation changes will include combining 3 Digit (L003) and AADC (L801) into the L801 AADC sortation and removing the L003 labeling list. This change is applicable to Standard Mail (Regular and Nonprofit) Automation letters, First-Class Mail Automation Postcards, Automation letters and Roundtrip DVD, CD, or Other Disc Mail Automation letters. The USPS is creating one price for commercial letters up to 3.5 ounces. This includes First- Class Mail (FCM) Residual letters. This list includes First-Class Machinable Ltrs. Standard Machinable, Automated and Carrier Rt. Automated Ltrs. This proposal does not include single-piece First-Class Mail retail letters. Renaming Alternate Postage to Share Mail. This product is limited to letters and postcards and prefunding is no longer necessary with the Share Mail product. Share Mail customers who wish to participate must provide a pre-approved mailpiece with a FIM E (Facing Identification Mark E pattern), Indicia and IMb. The USPS is removing the prefunding pricing tiers for Share Mail and instead will have one price for letters ($0.57) and one price for postcards ($0.42) which will be charged post processing. The customer pays for 100% of postage based on the number of IMb scans received to determine piece count. Automated invoicing process will deducts the funds from the mailers CAPS account. Picture Imprint Will No longer be authorized for Share Mail IMBA will automatically send transactions to PostalOne!

Market Dominant Classification Changes Continued Update Weight Limit for Piece Pricing For Standard Mail Non Auto Letters and Flats Increase Marketing Non Auto & Non Machinable Ltrs. and Mail flats piece price weight break from 3.3 to 4.0 ozs. Allows mailers to add weight in order to add value to mail piece Piece/price pound prices will apply to pieces four ounces and greater. Standard Mail name to change to USPS Marketing Mail Named to influence marketers who are not in the mail Identifies majority of the volume in the class 18 month transition The indicia on the mail pieces should continue to display current Standard Mail abbreviations until notified by the USPS The USPS is changing the weight for piece pound pricing from 3.3 oz. to 4.0 oz. Piece/price pound prices will apply to pieces four ounces and greater for Non-Automated Ltrs. Non-Machinable Ltrs. and Flats The USPS is changing the product name of Standard Mail to USPS Marketing Mail. All postage forms and reports will be updated to reflect the name change in Jan. 2017. Note: The indicia on the mailpieces should continue to display current standard mail abbreviations until notified by the USPS. New Indicia and/or postage markings should not be used for letter or flat mailings until Jan. 2018 at the earliest. Tray Label and Pallet markings are deferred until Mid 2017 at the earliest. There will be changes to the Postage Statements. The following Postage Statements will be updated: PS Form 3602-C, PS Form 3602-EZ, PS Form 3602-N, PS Form 3602-NR, and PS Form 3602-R. There will be no changes to the Shipping Services File. There will be no changes to Mail.dat and Mail.XML. This will take place over a 18 month time frame, mailers will be notified of when additional changes and timelines are put in place.

USPS Marketing Mail ~0.9% overall increase Product CPI Percent Change Letters 2.0% Flats 2.5% Carrier Route Letters, Flats, and Parcels -3.0% High Density / Saturation Letters 2.2% High Density / Saturation Flats and Parcels -2.0% Parcels 1.6% EDDM-Retail 0.6% 12

Key USPS Marketing Mail Commercial Origin Prices Current Price New Percent Change Letters (5-Digit Auto entered at Origin) 0.255 0.251 -1.6% Flats (5-Digit Auto Flat entered at Origin) 0.376 0.387 2.9% Carrier Route (Flat entered at Origin) 0.288 0.290 0.7% High Density/Saturation Letters (Saturation Letter entered at Origin) 0.194 0.186 -4.1% High Density/Saturation Flats (Saturation Flat entered at Origin) 0.205 0.218 6.3% EDDM-Retail 0.176 0.177 0.6% Changes in origin prices to help pass through 13 13

Marketing Mail Automation Commercial Letters Prices Marketing Mail Auto Letters Current Price New $ Difference % Difference Mixed Origin $0.291 $0.288 -$0.003 -1.0% 5-Digit Origin $0.255 $0.251 -$0.004 -1.6% 5-Digit DNDC $0.220 $0.225 $0.005 2.2% 5-Digit DSCF $0.211 $0.217 $0.006 2.8% HD DSCF $0.164 $0.168 $0.004 2.4% Saturation Origin $0.194 $0.186 -$0.008 -4.1% Saturation DNDC $0.162 $0.000 -0.0% Saturation DSCF $0.151 $0.155 $0.035 $0.026 $0.009 $0.008 Narrow gap between 5-D and Saturation DNDC and DSCF $0.032 $0.024 $0.011 $0.007

Marketing Mail Piece-Rate Commercial Flats Prices Auto Flats Current Price New Price $ Difference % Difference 5-Digit DSCF in FSS $0.288 $0.335 $0.047 16.3% 4.2% 5-Digit DSCF not in FSS $0.333 $0.002 0.6% C-R Basic DSCF in FSS $0.252 -$0.036 -12.5% 0.2% C-R Basic DSCF not in FSS $0.245 $0.007 2.9% Pure C-R DSCF not in FSS $0.240 $0.232 -$0.008 -3.3% Pure C-R DDU not in FSS $0.233 $0.221 -$0.012 -5.2% HD DSCF (125 pieces) $0.192 $0.194 1.0% HD+ DSCF (300 pieces) $0.187 $0.174 -$0.013 -7.0% Saturation DSCF (90%) $0.162 $0.164 1.2% Saturation DDU (90%) $0.153 $0.155 1.3% $0.088 $0.083 $0.005 $0.020 Elimination of FSS prices – Mail will pay prices for which it qualifies, qualify for CR pay CR, qualify for 5-D pay 5-D and so on Pure CR pallets – incentive to create direct pallets to avoid bundle sorting HD DSCF – fix rate anomaly – some pound rated flats cheaper than piece prices. $0.007 $0.011

Marketing Mail Pound Rate Commercial Flats Prices- 8 oz. Auto Flats Current Price New Price $ Difference % 5-Digit DSCF in FSS $0.451 $0.508 $0.057 3.7% 5-Digit DSCF not in FSS $0.496 $0.012 C-R Basic DSCF in FSS $0.394 -$0.057 -1.5% C-R Basic DSCF not in FSS $0.391 $0.003 Pure C-R DSCF not in FSS $0.386 $0.374 -$0.012 -6.7% Pure C-R DDU not in FSS $0.365 $0.352 -$0.013 -7.4% HD DSCF $0.311 $0.294 -$0.017 -5.5% HD+ DSCF $0.287 $0.274 -4.5% Saturation DSCF $0.281 $0.264 -6.0% Saturation DDU $0.260 $0.246 -$0.014 -5.4% Encourage more weight in in 3.3 to 4. ounces

Detached Address Labels (DALs) Marketing Mail Detached Address Labels (DALs) Price remains the same at 3.5 cents

Key USPS Marketing Mail Nonprofit Origin Prices Current Price New Percent Change Letters (5-Digit Auto entered at Origin) 0.140 0.134 -4.3% Flats (5-Digit Auto Flat entered at Origin) 0.237 0.244 3.0% Carrier Route (Flat entered at Origin) 0.214 0.209 -2.3% High Density/Saturation Letters (Saturation Letter entered at Origin) 0.120 0.111 -7.5% High Density/Saturation Flats (Saturation Flat entered at Origin) 0.131 0.136 3.8% 18 18

Market Dominant Classification Changes Marketing Mail FSS Marketing Mail reverts to previous structure Reverts to structure in place prior to January 2014 Carrier Route Pieces pay Carrier Route prices etc. Prices not based on equipment used to sort – label list determine bundle and pallet makeup Allows Operations flexibility to add or remove ZIPS without impacting prices Encourage more Carrier Route Bundles on 5-Digit Pallets in non-FSS zones Wider incentives to prepare more direct pallets of CR volume Wider incentives to enter those pallets at DDU Note: Pieces prepared in FSS Scheme bundles, placed on FSS Scheme pallets and entered at an FSS location will be eligible for DSCF prices. The USPS is eliminating the Flats Sequencing System (FSS) pricing cells from price tables and postage statements. Postage prices for flats will be driven through virtual sortation levels at 3 digit and 5 digit, for both barcoded and non-barcoded and Carrier Route (CR) (BPM only) CR Basic, CR High Density Plus (Std M only), CR High Density, and Saturation (Periodicals only) prices. USPS will manage FSS mail preparation through existing mailing standards and labeling lists as outlined in Domestic Mail Manual (DMM) sections 705 and 708. Every piece in an FSS bundle must be properly marked (OEL) to determine price and class eligibility. FSS Scheme bundle prep: • There are no changes to current FSS bundle prep rules. All presorted and basic carrier route Standard Mail, presorted and carrier route Bound Printed Matter (BPM), and Periodicals flats must be sorted to FSS schemes. FSS per Piece Price: • There will be changes to FSS per Piece Prices. FSS Scheme per piece price cells will be eliminated. Per piece prices will be determined by piece pre-sort prior to placing in an FSS Scheme bundle. FSS Scheme pallet prep: • There will be no changes to current FSS Scheme pallet prep rules. An FSS scheme pallet, or approved alternate container, must be made when 250 pounds or more of bundles are available for an individual FSS scheme. FSS Scheme pallet/Destination prices: • There will be changes to FSS Scheme pallet destination prices. DFSS price cells will be eliminated. Destination per piece prices will now be determined by entry location (DNDC, DSCF). Note: Pieces prepared in FSS Scheme bundles, placed on FSS Scheme pallets and entered at an FSS location will be eligible for DSCF prices. FSS Facility pallet prep: • There will be no changes to current FSS Facility pallet prep rules. Permitted only for FSS Scheme Bundles prepared for FSS Scheme Bundles prepared for FSS sort plans processed within the same facility. (L006) FSS Facility pallet/Destination prices: • There will be changes to FSS Facility pallet destination prices. DFSS price cells will be eliminated. Destination per piece prices will now be determined by entry location (DNDC, DSCF). Note: Pieces prepared in FSS Scheme bundles, placed on FSS Facility pallets and entered at an FSS location will be eligible for DSCF prices.

CPI Percent Periodicals Change Outside County 0.8% Inside County 1.0% On average, large circulation publications will pay 0.5 to 3 percent less in postage due to this price change. On average, heavier weight mailers will also see their postage decline around 0.5 percent to 1 percent. On average, large Nonprofits mailers will see changes in their prices from 0.9 percent increases to declines of 3.3 percent. On average, smaller, low circulation publications (less than 150 thousand per issue) will see above average increases due to small circulation and lighter weight pieces. About the same increase for Outside and Inside County

Market Dominant Classification Changes Periodicals FSS pricing structure for Periodicals reverts to previous structure Reverts to structure in place prior to January 2014 Carrier Route Pieces pay Carrier Route prices etc. Prices not based on equipment used to sort – label list determine bundle and pallet makeup Allows Operations flexibility to add or remove ZIPS without impacting prices FSS Bundle Prices for Periodicals: • There will be changes to FSS Bundle prices for Periodicals. FSS price cells for Periodical bundle charges will be eliminated. FSS Scheme bundles placed on FSS Scheme pallets will pay bundle level Carrier Route prices. FSS Scheme bundles placed on FSS Facility pallets will pay bundle level 3-Digit/SCF prices. FSS Sack and Tray Prices for Periodicals: • There will be changes to FSS Sack and Tray prices for Periodicals. FSS price cells for Periodical sack and tray prices will be eliminated. Sacks and trays prepared as FSS Scheme or FSS Facility sacks and trays will pay 3-Digit/SCF tray/sack prices. Entry sack and tray prices for Periodicals will be determined by entry location (DSCF, DADC, DNDC, and Origin). FSS Pallet prices for Periodicals: • There will be changes to FSS pallet prices for Periodicals. FSS price cells for Periodical pallet prices will be eliminated. Periodical FSS Scheme containers will pay the Carrier Route pallet price. Periodical FSS Facility pallets will pay 3-Digit/SCF pallet prices. Entry pallet prices will be determined by entry location (DSCF, DADC, DNDC, and Origin).

Market Dominant Classification Changes Marketing Mail Eliminate 3-Digit Automation Letters presort level for Standard Mail Presort Prices have been the same since 2012 Combines the 3 Digit (L003) and AADC (L801) into the L801 AADC sortation Simplify Marketing Automation Letters by eliminating the per pound rate between 3.3 and 3.5 ounces Simplifies Marketing Mail Letters Increase Marketing Mail flats piece price weight break from 3.3 to 4.0 ozs. Allows mailers to add weight in order to add value to mail piece Piece/price pound prices will apply to pieces four ounces and greater.

Package Services ~1.0% overall increase Product CPI Percent Change Media Mail/Library Mail 1.1% Alaska Bypass Bound Printed Matter Flats 0.8% Parcels 1.0% Increase very close to 1% 23

Market Dominant Classification Changes Package Services FSS Bound Printed Matter reverts to structure in place in 2014 Carrier Route and Presorted FSS prep continues to be required Standard Mail Parcels will have a Simplified Pricing Structure Saturation and Carrier Route Parcels (Simple Samples) Reduce from 6 Volume Pricing Tiers down to 2 Volumes up to and equal to 200,000 pieces Volumes greater than 200,000 pieces

Extra Services ~2.5% overall increase Product CPI Percent Change PO Boxes™ 6.7% Certified Mail® 1.5% Return Receipt 2.9% Registered Mail™ 0.0% Insurance 0.5% COD 2.5% All Other Free Del Con freed up cap authority 25

Market Dominant Classification Changes Special Services – Simplification of Shipping Product Permits Combine Permit for Outbound/Return Shipping Products New Permit - Shipping Products Permit Eliminate fees for Inbound/Outbound Commercial Competitive Shipping Products Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, Parcel Select Lightweight, Library Mail, Media Mail, and Bound Printed Matter (parcels). If you use Merchandise Return (MR) and Business Reply Mail (BRM) permits to receive parcels through USPS Returns products you will no longer have to pay the applicable annual permit fees for: Merchandise Return Service, Business Reply Mail (Parcels only), USPS Returns (Scan Based Payment), and Parcel Return Service. Redesign COD to provide only Hold-for-Pickup delivery Effective January 22, 2017, the Postal Service will eliminate permit imprint application fees and annual mailing fees for certain parcel products and mail classes. The Postal Service will introduce a new permit called the “Shipping Products Permit” that is designed to provide mailers the option of utilizing one permit for both outbound and return products. These changes are designed to help simplify the shipping experience for parcel customers If you use a permit imprint (PI) to ship parcels, you will no longer have to pay the applicable permit imprint application fees, annual presort or destination entry fees if the permit imprint permit is exclusively used for shipping parcels using one, some, or all of the following products: Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, Parcel Select Lightweight, Library Mail, Media Mail, and Bound Printed Matter (parcels). If you use Merchandise Return (MR) and Business Reply Mail (BRM) permits to receive parcels through USPS Returns products you will no longer have to pay the applicable annual permit fees for: Merchandise Return Service, Business Reply Mail (Parcels only), USPS Returns (Scan Based Payment), and Parcel Return Service.

Emerging and Advanced Technology/Video In Print Calendar 2016 JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC FIRST-CLASS MAIL® Earned Value Registration February 15 –March 31 ENDED Promotion Period (3 months) April 1 – June 30 Personalized Color Transpromo Registration May 15 - December 31 Promotion Period (6 months) July 1 – December 31 STANDARD MAIL® AND FIRST-CLASS MAIL Emerging and Advanced Technology/Video In Print Registration January 15 – August 31 Promotion Period (6 months) March 1 – August 31 ENDED STANDARD MAIL Tactile, Sensory & Interactive Mailpiece Engagement Registration January 15 – August 31 ENDED Promotion Period (6 months) March 1 – August 31 Mobile Shopping Registration May 15 – Dec 31 Promotion Period (6 months) July 1 – December 31

Emerging & Advanced Technology Calendar 2017 PRC approved as of June 16, 2016 NOV – DEC 2016 JAN – FEB - MARCH APRIL – MAY - JUNE JULY – AUG - SEPT OCT – NOV - DEC FIRST-CLASS MAIL Earned Value Registration Nov 15 - Dec 31, 2016 Promotion Period (6 months) January 1 – June 30 Color Transpromo *Registration closes Dec. 31, 2016 Registration May 15 - Dec 31 Promotion Period (6 months) July 1 – December 31 MARKETING AND FIRST-CLASS MAIL Emerging & Advanced Technology Registration Jan 15 – Aug 31 Promotion Period (6 months) March 1 – August 31 MARKETING MAIL Tactile, Sensory & Interactive Engagement Registration Dec 15 – July 31 Promotion Period (6 months) February 1 – July 31 Direct Mail Starter Registration March 15 – July 31 Promotion Period (3 months) May 1 – July 31 Mobile Shopping Registration June 15 – Dec 31 Promotion Period (5 months) August 1 – December 31)

2017 Promotions Earned Value (First Class Mail) 5 cents per piece credit for all Business Reply Mail or Courtesy Reply Mail pieces received. Alternate Postage aka Share Mail also included in this year’s promotion Color Transpromo (First Class Mail) A 2% discount provided for mail that uses variable color printing and personalized color messaging on bills and statements (New participants only need to meet the color criteria) Tactile, Sensory & Interactive Mailpiece Engagement (Marketing Mail) Receive a 2% discount when using specialty inks, sensory elements, textural papers, and or other dimensional interactive elements on the mailpiece Review Program Requirements documents for complete participation instruction.

2017 Promotions Emerging & Advance Technology (1C & Marketing Mail) Get a 2% discount on mailpieces that use Near Field Communication (NFC), “enhanced” Augmented Reality, Video in Print & Beacon technology. Also, new this year, Virtual Reality, Digital to Direct Mail & other developing technologies may also qualify! Direct Mail Starter – NEW (Marketing Mail) This promotion offers a 5% discount to new mailers on up to 10,000 mailpieces that include , at a minimum a QR Code that leads to a mobile optimized website New - Mobile Shopping (Marketing Mail) Receive a 2% discount on Standard Mail mailpieces with a barcode or other mobile-enabled technology that leads to a mobile-optimized shopping website Review Program Requirements documents for complete participation instruction.

Parcel Select Heavyweight 3.5%* Parcel Select Lightweight (PSLW) 8.0% Competitive Prices January 2017 Products % Change Competitive Priority Mail 3.9% Priority Mail Express 3.3% Parcel Select Heavyweight 3.5%* Parcel Select Lightweight (PSLW) 8.0% First-Class Package Service (FCPS) 4.1% Retail Ground 3.8% Parcel Return Service (PRS) 5.5% International 0.1% For destination entry only categories, the average increase is 4.9% Introduced Half and full tray flat-rate pricing for Premium Forwarding Service

Informed Delivery New USPS Service Provides Images of Daily Mail Before it is Delivered to Mailbox Sign Up Online: http://www.informedelivery.com/learnmore/ No Associated Cost Mailers Can Participate

Resources Online Postal Explorer® ─ pe.usps.com Current and new prices Including downloadable price files in excel and CSV formats Federal Register notices Domestic Mail Manual & International Mail Manual DMM® Advisory ─ posted on Postal Explorer, also special e-mail updates

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