Pass-Through Postage Pricing: The Secret to Achieving Cost Certainty

The Internet makes it easier than ever to shop around and look for the best price on a product, whether you’re a consumer buying a pair of shoes or a mail center employee seeking the best price on paper goods or printing capabilities.

Shopping around is especially valuable in the latter scenario, as a focus on cost efficiency and lean budgets puts pressure on many enterprise businesses to draw more value out of every dollar spent. Organizations strive to achieve world-class operational excellence, which means optimizing mail center productivity, workflow and costs. However, mailers trying to manage tighter budgets often overlook one key area of potential improvement: postage pricing.

Most enterprises don’t think twice about the cost of postage – at least until they see what they’ll have to pay. And while you might think your hands are tied when it comes to this expense, there’s actually much more to postage costs than what meets the eye.

That’s especially true if you send your mail through third-party mail/marketing service providers (MSPs) that charge on a Pass-Through Pricing model. Designed to offer mailers the best possible pricing, pass-through pricing can actually also introduce price variability that makes it difficult for mailers to be sure of their postage cost ahead of time. To solve this budgeting challenge, you can work with MSPs to achieve better cost certainty through fixed prices. Here’s what you should know about pass-through postage pricing.

Understanding Pass-Through Pricing

The U.S. Postal Service allows workshare partners to pass through USPS® postage pricing directly to their own clients. This structure gives MSPs the option to share favorable pricing from the Postal Service with clients, however it’s dependent on factors that are out of the client’s hands.

Postage cost qualification is determined primarily by the volume of mail processed as well as the ZIP codes to which the mail must be delivered. MSPs presort mail, grouping it by ZIP code and working to sort it as finely as possible to achieve the best savings.

For example, let’s say your MSP has a busy day and presorts an exceptionally high volume of mail, thus unlocking USPS presort discounts and achieving a postage price-per-mailpiece that’s lower than typical rates. With Pass-Through Pricing, you would also enjoy the benefit of those discounts.

However, if your MSP’s mail volume is lower another day, it may no longer qualify for the same discounts. With traditional Pass-Through Pricing, you’re now on the hook to pay the slightly higher rate that resulted from your MSP’s subpar day. It’s hard for mail centers to commit to a budget when postage costs can vary so considerably.

Fixed Pricing Creates Price Certainty

The solution to Pass-Through Pricing uncertainty is to shop around and search for flexibly priced solutions. In some situations, traditional Pass-Through Pricing may be the most cost-effective option for your mailing if it ensures you’re receiving the lowest possible discounts directly from the USPS.

In other situations, it may be more appropriate to work with a presort service provider who offers guaranteed fixed per piece-pricing. In this scenario, the MSP carries the burden of variations in mail processing, and no matter what discounts the MSP may or may not qualify for, you always pay the same price. That offers much more postage price consistency, making it easier for you to budget your mail campaigns.

Ultimately, as a mail owner, it helps for you to understand that a number of factors are in play with postage pricing. You don’t necessarily have to pay the price that’s posted – there may be better options out there if you look around.

Learn more about your presorting options.