New Prices New Flexibility New Opportunities May 12, 2008

2 Agenda  Postal Act of 2006  Mailing Services  Shipping Services  Resources New Prices – May 12, 2008

3 Postal Act of 2006  Two categories: ► Mailing Services with a cap ► Shipping Services with a floor  Flexibility  Predictability  Choices  Speed-to-market New Prices – May 12, 2008

4 Mailing Services  First-Class Mail (includes First-Class Mail International)  Standard Mail  Special Services  Periodicals  Package Services New Prices – Mailing Services – May 12, 2008

5 Mailing Services  Consumer Price Index (CPI) cap  2.9% average increase by class  Annual, predictable price changes  45-day notice required  90-day commitment New Prices – Mailing Services – May 12, 2008

6 First-Class Mail  $38 billion revenue  Average +2.89% New Prices – Mailing Services – May 12, 2008 Product% Change Single-Piece Letters & Cards2.50 Presort Letters & Cards3.55 Flats1.93 Parcels2.18 International3.09

7 First-Class Mail – Single-Piece  Letter: 42¢ (+1¢)  Forever Stamp ► Plenty of stamps on hand  No more nondenominated transition stamps New Prices – Mailing Services – May 12, 2008

8 First-Class Mail – Single-Piece  Additional ounce: 17¢ (unchanged)  Nonmachinable surcharge: 20¢ (+3¢) ► New 62¢ stamp for 1-ounce square envelopes such as greeting cards  Postcard: 27¢ (+1¢) New Prices – Mailing Services – May 12, 2008

9  Promote efficient preparation  Maintain strong 2.2¢ incentive for 5-digit  Presort letters additional ounce same price as for auto: 12.5¢ (- 4.5¢) First-Class Mail – Automation & Presort Letters New Prices – Mailing Services – May 12, 2008

10  Align with domestic ► Shape-based pricing First-Class Mail International New Prices – Mailing Services – May 12, ounce to Canada/Mexico2007NewChange Letter69¢72¢+3¢ Flat69¢98¢+29¢ Package69¢$ ¢  Nonmachinable letter surcharge: 20¢  Align country grouping with other international products

11 Standard Mail  $21 billion revenue  Average +2.84% New Prices – Mailing Services – May 12, 2008 Product% Change Letters3.31 Flats0.86 Parcels and NFMs9.66 High Density / Saturation Letters1.66 High Density / Saturation Flats and Parcels2.09 Carrier Route Basic Letters, Flats, and Parcels2.99

12 Standard Mail Flats (catalogs)  Price increase well below average Examples (5-digit/DBMC) 2007NewChange 3-oz Catalog30.2¢30.6¢+0.4¢ 4-oz Catalog35.8¢35.9¢+0.1¢ 5-oz Catalog39.4¢ 0.0¢ 8-oz Catalog47.6¢47.5¢-0.1¢ New Prices – Mailing Services – May 12, 2008

13  Lower pound prices for saturation and high-density flats Examples ( Saturation at DDU) 2007NewChange 3-oz Catalog13.6¢14.0¢+0.4¢ 4-oz Catalog15.2¢15.5¢+0.3¢ 5-oz Catalog17.6¢17.7¢+0.1¢ 8-oz Catalog24.6¢24.4¢-0.2¢ New Prices – Mailing Services – May 12, 2008 Standard Mail Flats

14 Periodicals  $2.2 billion revenue  Average +2.72% New Prices – Mailing Services – May 12, 2008 Product% Change Outside-County2.71 In-County2.63  Allow recent changes to settle in and work on efficiency  New, limited-circulation pricing

15 Package Services  $1.8 billion revenue  Average +2.88% New Prices – Mailing Services – May 12, 2008 Product% Change Parcel Post3.30 BPM Flats0.47 BPM Parcels2.10 Media Mail and Library Mail4.54

16 Special Services  $2.7 billion revenue  Average +2.85% New Prices – Mailing Services – May 12, 2008 Product% Change Post Office Boxes2.89 Certified Mail1.89 All others3.29  Certified Mail: $2.70 (+5¢)  Return Receipt: $2.20 (+5¢)  Annual Mailing Fees: $180 (+$5)  Delivery Confirmation: no change

17 Shipping Services  Greater pricing freedom and flexibility  No price cap  Each product and contract must cover cost  Must cover 5.5% of Postal Service overhead  30-day notice required  60-day commitment New Prices – Shipping Services – May 12, 2008

18 Shipping Services  Priority Mail  International  Express Mail  Parcel Select  Parcel Return Service New Prices – Shipping Services – May 12, 2008

19 New Price Structures and Incentives Price Lists  Retail prices  Commercial base prices  Commercial volume prices Negotiated pricing  Commercial contract prices New Prices – Shipping Services – May 12, 2008

20 Express Mail  Average +3%  Sunday and holiday premium: $12.50 (introduced March 3)  Zoned pricing with competitive local pricing New Prices – Shipping Services – May 12, 2008 Retail Prices New Weight2007Zones L, 1 & 2Zone 3 Flat-Rate Envelope $16.25 $ /2 lb.$16.25$12.60$ lb.$24.50$16.65$ lb.$45.25$28.60$38.10  Rename Post Office-to-Post Office as “Hold For Pickup”

21 Express Mail Commercial base prices  3% lower than Retail for Express Mail Corporate Accounts (EMCA), Click-N-Ship, and PC Postage New Prices – Shipping Services – May 12, 2008

22 Express Mail Commercial volume prices  EMCA and PC Postage New Prices – Shipping Services – May 12, 2008 Minimum Quarterly Volume Additional % (postal quarterly rebate) Total % off retail 1252%5% %7.5% 9387%10%

23 Priority Mail  Average +6%  New large Flat-Rate box (introduced March 3) ► Lower price for APO/FPO addresses New Prices – Shipping Services – May 12, 2008

24 Priority Mail Commercial base prices  Lower than retail for Click-N-Ship, PC Postage, and permit imprint New Prices – Shipping Services – May 12, 2008

25 Priority Mail Price examples New Prices – Shipping Services – May 12, 2008 Flat-Rate2007RetailCommercial Envelope $4.60$4.80$4.75 Box (regular) $8.95$9.80$9.30 Box (large) (introduced March) $12.95 $12.50 Box (large) APO/FPO (introduced March 3) $10.95 $10.50

26 Parcel Select  Last-mile commercial service  Average +5.7%  Promote destination delivery unit (DDU)  Commercial volume prices for DDU ► Based on new growth above a threshold ► Annual rebates New Prices – Shipping Services – May 12, 2008

27 Parcel Return Service  First-mile commercial service  Average +2%  Align pricing with outbound DDU ► Weight-based pricing New Prices – Shipping Services – May 12, 2008

28 Global Express Guaranteed  Average +5.2% Retail price examples New Prices – Shipping Services – May 12, NewChange 1/2 lb.$37.00$38.95$ lbs.$77.00$82.00$5.00  Expedited date-certain delivery with money-back guarantee to over 190 countries  Commercial base prices ► 10% lower than retail for Click-N-Ship and PC Postage

29 Express Mail International  Average +6% Retail price examples New Prices – Shipping Services – May 12, 2008  Date-certain delivery with money-back guarantee for packages sent to Pacific Rim countries 2007NewChange 1/2 lb., Flat-Rate Envelope $25.00$ ¢ 5 lbs.$44.00$45.50$1.50

30 Express Mail International New Prices – Shipping Services – May 12, 2008  Commercial base prices ► 8% lower than retail for Click-N-Ship, PC Postage, Global Shipping Software (GSS), and Express Mail Corporate Account (EMCA)

31 Express Mail International New Prices – Shipping Services – May 12, 2008  Commercial volume prices ► Express Mail Corporate Account Annual VolumeAnnual Postage Commercial Base Price Incentive Commercial Volume Price Incentive No minimum 8% 1,000–2,999 pieces$20,000–$59,99910% 3,000 pieces and above$60,000 and above12%

32 Priority Mail International  Average +6.1% Retail price examples New Prices – Shipping Services – May 12, NewChange Flat-Rate Envelope $11.00$ ¢ 5 lbs.$38.00$40.50$2.50 Flat-Rate Box (regular) $37.00$38.95$1.95  New large Flat-Rate box (introduced March 3)

33 Priority Mail International  Commercial base prices ► 5% lower than retail for Click-N-Ship, PC Postage, and permit imprint New Prices – Shipping Services – May 12, 2008

34 International Priority Airmail (IPA) and International Surface Airlift (ISAL) New Prices – Shipping Services – May 12, 2008  Average price increase ► IPA: 12.5% ► ISAL: 21.3%  Continue published prices for full-service and drop ship  Eliminate published ISAL prices for Direct Shipment ► Now, available through customized agreement

35 Resources New Prices – May 12, 2008  USPS.com/prices ► Mailing Services and Shipping Services highlights ► New price lists ► Downloadable price files ► New Postage Statements ► Federal Register notices

36 Resources  Postal Explorer (pe.usps.com)  PCC Insider – PCC e-newsletter  DMM Advisory – customer e-newsletter  P&C Weekly – employee e-newsletter  MailPro – late April (usps.com/mailpro) New Prices – May 12, 2008