1. Price Change 2018
January 2018

2. 2018 Price Change Agenda Overview Market Dominant First-Class Mail®
USPS Marketing Mail®
Package Services
Extra Services
Overview Competitive
Time Line
Implementation Sunday, January 21, 2018
PRC Ten Year Review

3. 2018 Price Change Strategy – use 95% of available cap 1.987%
Needed to be within 95% of CPI by class
CPI forecasted at 1.44% for August 2018
Governors' term ended in December of 2016
Approved the MD strategy
Approved 95%
Approved the Competitive prices
Promotions
Continue to develop potential new promotions
Evaluate when new Governors are approved
Impact
FC - $40M
MM - $60M
Strategy – use 95% of available cap

4. First-Class Mail - ~1.9% overall increase
2018 Price Change
First-Class Mail - ~1.9% overall increase
First-Class stamp price moves to 50 cents
Product
CPI Percent Change
Single-piece Letters & Cards
2.1%
Single-piece Metered
2.2%
Flats
0.4%
Parcels*
N/A
Presort Letters & Cards
1.6%
First-Class Mail International**
(includes letters, cards, and flats)
0.0%
* Moved to Competitive 9/3/2017
** Does not include International Inbound 4

5. Key First-Class Mail Single-Piece Prices
2018 Price Change
Key First-Class Mail Single-Piece Prices
Current
Price
New
Percent
Change
Stamp Price 1 Oz.
0.49
0.50
2.0%
Single Piece Additional Ounce
0.21
0.0%
Meter Price 1 Oz.
0.46
0.47
2.2%
Single-Piece Flats 1 Oz.
0.98
1.00
Single-Piece Cards
0.34
0.35
2.9%
Keep extra ounce at $0.21 cents
Meter increase one cents
Flats – 2 times SP price , two stamps
SP Cards – increase by one cent

6. Key First-Class Mail Bulk Prices
2018 Price Change
Key First-Class Mail Bulk Prices
Current
Price
New
Percent
Change
Mixed AADC Automation Letters
0.423
0.424
0.2%
AADC Automation Letters
0.403
0.408
1.2%
5-Digit Automation Letters
0.373
0.378
1.3%
Mixed ADC Automation Flats
0.750
0.705
-6.0%
3-Digit Automation Flats
0.630
0.593
-5.9%
5-Digit Automation Flats
0.446
0.474
6.3%
Address Flats WS
Reduce MADC Flats -6%
Raise 5D Flats +6%
Up to 3.5 ounces for free for commercial letters remains
Note: IMb discount remains at $0.003.

7. USPS Marketing Mail 2018 Price Change ~1.9% overall increase Product
CPI Percent Change
Letters
2.0%
Flats
2.1%
Carrier Route Letters, Flats, and Parcels
High Density / Saturation Letters
2.4%
High Density / Saturation Flats and Parcels
1.1%
Parcels
2.8%
EDDM-Retail
0.6%
IMb Discount remains at $0.001
Change order of pallet preparation
CR pallets made before merged pallets
Note: IMb discount remains at $0.001.
Incent Pure CR Pallets by prioritizing pure pallets during preparation 7

8. Key USPS Marketing Mail Commercial Origin Prices
2018 Price Change
Key USPS Marketing Mail Commercial Origin Prices
Current
Price
New
Percent
Change
Letters
(5-Digit Auto entered at Origin)
$0.251
0.00%
Flats
(5-Digit Auto Flat entered at Origin)
$0.387
$0.393
1.55%
Carrier Route
(Flat entered at Origin)
$0.290
$0.295
1.72%
High Density/Saturation Letters
(Saturation Letter entered at Origin)
$0.186
High Density/Saturation Flats
(Saturation Flat entered at Origin)
$0.218
$0.219
0.46%
EDDM-Retail
$0.177
$0.178
0.56%
Over incenting dropship letters
Narrowed in last price change
Continue to close gap (taking a measured approach)
10 percentage points by PRC req. 8

9. Nonprofit Origin Prices
2018 Price Change
USPS Marketing Mail
Nonprofit Origin Prices
Current
Price
New
Percent
Change
Letters
(5-Digit Auto entered at Origin)
$0.134
$0.136
1.49%
Flats
(5-Digit Auto Flat entered at Origin)
$0.244
$0.227
-6.97%
Carrier Route
(Flat entered at Origin)
$0.209
$0.213
1.9%
High Density/Saturation Letters
(Saturation Letter entered at Origin)
$0.111
0.00%
High Density/Saturation Flats
(Saturation Flat entered at Origin) NP
Revenue per piece is required to be 60% of commercial prices
Law states at subclass level
Currently applied a class level
Proposal at PRC to move back to subclass 9

10. 2018 Price Change Current Price New
Marketing Mail Comm.
Auto Letters
Current
Price
New
$ Difference
% Difference
Mixed Origin
$0.288
$0.287
-$0.001
-0.35%
5-Digit Origin
$0.251
$0.000
0.00%
5-Digit DNDC
$0.225
$0.227
$0.002
0.89%
5-Digit DSCF
$0.217
$0.220
$0.003
1.38%
HD DSCF
$0.168
$0.172
$0.004
2.38%
Saturation Origin
$0.186
Saturation DNDC
$0.162
$0.164
1.23%
Saturation DSCF
$0.155
$0.158
1.94%
$0.026
$0.024
$0.008
$0.007
Narrow incentive for dropship letters by 10 percentage points
Narrow NDC
Narrow DSCF
Narrow incentive for HD Letters
Same processing as 5D
$0.024
$0.022
$0.007
$0.006

11. Marketing Mail Nonprofit
2018 Price Change
Marketing Mail Nonprofit
Auto Letters
Current
Price
New
$ Difference
% Difference
Mixed Origin
$0.171
$0.172
$0.001
0.58%
5-Digit Origin
$0.134
$0.136
$0.002
1.49%
5-Digit DNDC
$0.108
$0.112
$0.004
3.70%
5-Digit DSCF
$0.100
$0.105
$0.005
5.00%
HD DSCF*
$0.087
$0.090
$0.003
3.45%
Saturation Origin
$0.111
$0.000
0.00%
Saturation DNDC
$0.089
2.30%
Saturation DSCF
$0.080
$0.083
3.75%
$0.026
$0.024
$0.008
$0.007 NP
Higher increases
Smaller actual change
Prices lower than commercial counterparts
$0.024
$0.022
$0.007
$0.006

12. 2018 Price Change Current Price New Price Incent pre CR Pallets
Marketing Mail Comm.
Auto Flats
Current
Price
New Price
$ Difference
% Difference
5-Digit DSCF
$0.335
$0.340
$0.005
1.49%
C-R Basic DSCF
$0.252
$0.257
1.98%
Pure C-R DSCF*
$0.232
$0.238
$0.006
2.59%
Pure C-R DDU*
$0.221
$0.227
2.71%
HD DSCF (125 pieces)
$0.194
$0.000
0.00%
HD+ DSCF (300 pieces)
$0.174
$0.173
-$0.001
-0.57%
Saturation DSCF (90%)
$0.164
$0.165
$0.001
0.61%
Saturation DDU (90%)
$0.155
$0.156
0.65%
$0.083
$0.083
$0.020
$0.019
$0.011
$0.011
Incent pre CR Pallets
Make CR bundles before merged bundles

13. Marketing Mail Pound-Rate Commercial Flats
2018 Price Change
Marketing Mail Pound-Rate Commercial Flats
Rev/Pc – 8 oz. Auto Flats
Current
Rev/Pc*
New Rev/Pc* $
Difference %
5-Digit DSCF
$0.508
$0.511
$0.003
0.59%
C-R Basic DSCF
$0.394
$0.393
-$0.001
-0.25%
Pure C-R DSCF
$0.374
$0.000
0.00%
Pure C-R DDU
$0.352
HD DSCF
$0.294
$0.293
-0.34%
HD+ DSCF
$0.274
$0.272
-$0.002
-0.73%
Saturation DSCF
$0.264
Saturation DDU
$0.246
Less focus on pound price
Deemphasizing weight
*Current and New Revenue per piece rounded to 3 decimal points

14. 2018 Price Change CPI Percent Periodicals Change Outside County 1.93%
Inside County
1.84%
The majority of the large circulation publications will pay between 1.0 and 1.9 percent more in postage from this price change.
On average, heavier weight mailers will also see their postage increase by less than CPI.
On average, large Nonprofit mailers will see changes in their prices from 1.3 percent increases to declines of 1.4 percent.
On average, smaller, low circulation publications (less than 150 thousand per issue) will see above average increases due to small circulation, lighter weight pieces and a higher percentage of non-machinable pieces.
Ride Along Prices changed by $0.001 or 0.6%

15. Package Services - ~2.0% overall increase
2018 Price Change
Package Services - ~2.0% overall increase
Product
CPI Percent Change
Media Mail/Library Mail
1.99%
Alaska Bypass
1.31%
Bound Printed Matter
Flats- Overall
2.09%
Origin – Carrier Route
-1.98%
DSCF – Carrier Route
3.83%
DDU – Carrier Route
6.35%
Parcels - Overall
1.92%
Origin - Basic Presort
-3.04%
DSCF - Basic Presort
2.33%
DDU - Basic Presort
4.66%
Over encouraged DDU entry for Flats ad Parcels
Being addressed in the price change
Comail BPM Flats with MM Flats and Periodicals
Note: Will allow co-mail up to 24 ounces with existing Periodical and Marketing Mail co-mail pools. 15

16. Extra Services - ~2.0% overall increase
2018 Price Change
Extra Services - ~2.0% overall increase
Product
CPI Percent Change
PO Boxes™
1.9%
Certified Mail®
3.0%
Return Receipt
0.7%
Certificate of Mailing
3.2%
Address Correction Service
2.5%
All Other
1.7% 16

17. 2018 Price Change Competitive Prices Products Priority Mail 3.9%
Jan. 2018
Products
% Change
Priority Mail
3.9%
Priority Mail Express
Parcel Select Heavyweight
4.9%
Parcel Select Lightweight (PSLW)
7.0%
First-Class Package Service (FCPS)
Retail Ground
Parcel Return Service (PRS)
International
FCM Retail Parcels
14.5%
0.8% Retail
6.2% Com. Base**
6.1% Com. Plus**
Overall 3.9% price increase
Comm. Base and Pulse – about 6%
FedEx 4.9%
Transfer FCM Parcels to competitive
* Estimated.
** Reduces Commercial Base discount to 9.4% off Retail & Commercial Plus discount to 12.7% off Retail.

18. Resources 2018 Price Change 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 updates
All information is available on Postal Explorer.
Notice 123 will be available close to the price change implementation date.

19. 10-Year Review

20. Disclaimer
This is intended as a summary of the PRC’s proposal in Order No. 4258, not as the Postal Service’s views on that proposal.
Any opinions are solely those of the presenter, not of the Postal Service.
The PRC proposal discussed here is just that: a proposal. These rules are not final.

21. 10-Year Review
PAEA directed:
PRC to determine whether current system meets objectives
Solicited comments - Dec. 20, 2016
80+ entities provided comments - March 2017
PRC issued findings Dec. 1, 2017
System not working
Issued proposed rules
Comments on proposed rule due March, 1, 2018

22. 10 Year Review – Is system meeting objectives?
Regulatory Proceedings
10 Year Review – Is system meeting objectives?
To maximize incentives to reduce costs and increase efficiency
To create predictability and stability in rates
To maintain high quality service standards
To allow the Postal Service pricing flexibility
To assure adequate revenues, including retained earnings, to maintain financial stability
To reduce the administrative burden and increase the transparency of the ratemaking process
To enhance mail security and deter terrorism
To establish and maintain a just and reasonable schedule for rates and classifications, however this shall not be construed to prohibit the Postal Service from making changes of unequal magnitude within, between, or among classes of mail
To allocate the total institutional costs of the Postal Service appropriately between market dominant and competitive products

23. Outline of PRC Proposal
10-Year Review PRC Proposal provides for:
Three different types of additional pricing authority
Specified bands and grace periods for workshare pass-throughs
Procedural changes impacting timeline and schedule for price changes

24. Questions?