By Jessica Dauer Lowrance and Gregory Dawson
Presented at the 30th Annual Eastern Conference of the Center for Research in Regulated Industries
“We need to challenge the entire industry to rethink costs, pricing, their relationship and the need to challenge the historic, inflexible connection between them. This paper is a timely call to liberate ourselves from the constraints of the past.” — Patrick R. Donahoe, Postmaster General of the United States
“It is exciting to see the Postal Service position itself for the 21st century. To make real the benefits a new postal costing system can provide to all requires every mailer to participate as fully as possible in the Postal Service’s intelligent mail program.” – Gene Del Polito, President, Association for Postal Commerce
Introduction
Congress changed the law that underpins the U.S. Postal Service with the enactment of the Postal Accountability and Enhancement Act of 2006 (PAEA). This was the first fundamental change to the American postal system since the enactment of the Postal Reorganization Act of 1970 (PRA). Despite Congress’ intent to add flexibility and adaptability to the way in which postal services are organized and regulated, the views regarding postal costing and pricing that developed over more than three decades under the PRA have not changed much at all, much to the disadvantage of what was supposed to be a reinvigorated Postal Service.
While PAEA still uses terms such as “attributable costs” and “institutional costs” to describe the basic framework by which postal economics are discussed, a careful reading of the new law plainly indicates that the legacy language Congress brought forward to the 2006 Act was not meant to straight-jacket the Postal Service with a way of operating and doing business that had grown increasingly anachronistic.
Today, postal economists still talk about attributable costs, markups, and worksharing discounts and pass-throughs as if Congress intended the postal system to be frozen in time rather than liberating it tobetter accommodate the nation’s changing postal needs and the postal service that provides for them.
This paper lays out a belief that the dictates of PRA-era postal economic thinking were not intended by Congress to be immutable. In fact, the authors very much are of the mind that Congress provided the Postal Regulatory Commission (PRC) and the U.S. Postal Service (USPS) with more than sufficient flexibility to allow a more business-like way of meeting the nation’s postal needs.
When PRA was enacted, the concept called “worksharing” was at a very nascent stage. It matured and grew quite extensively over the 35 years that the 1970 law was in effect. The idea of providing “discounts” as a measure of compensation for the preparation and processing of mail before it was entered into the postal system was developed and took hold with a focus on “cost avoided” obscuring a more businesslike approach to pricing that incudes consideration not only of cost factors, but also demand, This precipitated a seemingly endless controversy over the values, costs, and rewards of worksharing, and created disincentives to restructuring mail products and services in the more rational way that Congress envisioned through its enactment of PAEA.
The authors, in this paper, will set forward a more rational approach to the classification of mail products and services that retains the hallmarks of attributable and institutional costing calculations, but leads to a more appropriate and creative framework for determining the pricing of mail in today’s more competitive market.
Background
During the recession, companies pulled back on marketing efforts to reduce costs, while investigating new ways to meet and keep customers, compounding a long-standing negative trend in billing and correspondence volume. No one realistically expects mail volume to return to the pre-recession levels. What volume does return will be carefully tailored to enable mailers to do more with less, and will primarily be the less remunerative Standard Mail, rather than First-Class Mail. Standard Mail still will be used to conduct business with potential and existing customers, because of its high ROI. Service performance measurements and services, like the Intelligent Mail barcode (IMb) offered by Postal Service, will provide invaluable information and insight to mailers.
Despite cutting $11 billion in costs over the past three years, the U.S. Postal Service reported an $8.5 billion loss for Fiscal Year (FY) 2010. [1] The Postal Service experienced a 3.5 percent volume decline since FY2009, losing 6.2 billion pieces. During the same time, it cut 75 million workhours, or 6.0 percent of total labor cost, on top of the 115 million cut in the previous year. [2] The $8.5 billion loss in FY2010 followed a net loss of $3.8 billion in FY2009 and $2.8 billion in FY2008. [3] The Postal Service has attributed a significant portion of the 2010 loss to two non-operational costs. The first was the Congressionaly-mandated $5.5 billion retiree health benefit pre-payment. The Postal Service has contributed $42 billion into its retiree health benefit fund from 2007 to 2010. [4] The Postal Service is required to make additional payments of between $5.5 billion and $5.8 billion until 2016. [5] The second was a noncash allowance for workers’ compensation of $2.5 billion. [6] Without these two items, the Postal Service would have lost a much more modest $505 million.
The Postal Service also is facing the pressure of a shift in its product mix due largely to electronic diversion and changing customer needs. The implications for the Postal Service are already being felt. Although First-Class Mail (FCM) is still the largest single source of USPS revenue and accounted for 51 percent of total operating revenue of $67.1 billion (down from 53 percent last year), it continues to decline year-over-year. In 2010, it declined by 6.6 percent, in 2009 by 8.6 percent, and in 2008 by 4.8 percent. [7] The Postal Service has said “this trend is especially disturbing as First-Class Mail remains our most profitable product. To compensate for the financial loss of the contribution of one piece of First-Class Mail, Standard Mail must increase by three pieces.” [8] The Postal Service explained that it “. . . anticipate[s] stabilizing mail volume in the next few years, with declines in First-Class Mail being mostly offset by increases in Standard Mail.” [9]
Indeed, the diversion of FCM transactions to electronic alternatives has also accelerated the transformation of marketing decisions. Standard Mail, the primary and least costly vehicle for advertising in the mail, continues to grow, while FCM declines. [10] The Postal Service’s core mail business already has been affected by electronic forms of communication and information, and this is expected to accelerate in the future. This reality is manifested in excess capacity throughout the postal network. Through various efforts, the Postal Service is trying to reduce infrastructure by closing or consolidating facilities, post offices, and delivery units. [11]
CURRENT METHOD
Pricing
In the current regulatory scheme, postal “products” typically comprise a set of price categories for mail services that are differentiated by the amount of preparatory work done by the mailer (i.e., “worksharing”) before being handed-off to the Postal Service for final processing and delivery. Historically, prices for each product were determined through regulatory proceedings that used estimates of attributable costs and class-specific markups to recover non-attributable institutional costs. [12] This historical system had three (although not always complimentary) goals: a self-supporting (but not profit-seeking) Postal Service, the fulfillment of various public policy objectives, and economic efficiency.
Under the Postal Reorganization Act of 1970, the first of these goals, fiscal self-support, was addressed through the imposition of a break-even requirement. Prices were set to ensure that all products recovered their attributable costs and a portion of the non-attributable institutional costs in a manner that would ensure that total postal revenue was equal to total postal costs. [13] Under this scheme, the Postal Service was required to break even over time. The recovery of institutional costs also was governed by the application of other public policy factors and objectives determined by Congress. The application of these factors meant that there would be different institutional cost recovery contributions that would be exacted from each class of mail. The result of all of this was a set of markups that characterized the price relationships between postal products.
Economic efficiency, the third major goal of the pricing system, was tied to the idea of worksharing, through the concept of “efficient component pricing” (ECP). The basic assumption of ECP is that there existed a set of mailers who could perform part of the work ordinarily done in transporting and sorting mail at a lower cost than the Postal Service. If groups of these transporting and processing operations were less expensively by mailers, the Postal Service could forgo the related work and associated costs, thus adding to system-wide cost efficiency. The incentive for mailers to undertake such work was provided through a schedule of worksharing-related postal rate discounts that were designed to reflect Postal Service avoided costs if mailers undertake such work. As long as the discounts provided were greater than mailers’ actual costs, the whole postal system benefited from reduced overall cost. Under ideal circumstances, discounts would be equal to the cost avoided by USPS, thus providing the correct economic signal to mailers. In many instances, discounts amounted to something less than actual avoided costs.
The Postal Accountability and Enhancement Act of 2006 changed some elements of this pricing system. Most notably, the cost-of-service–style pricing system was replaced with a price-cap regime where average annual price increases for each class of mail could not exceed the overall consumer price inflation growth as measured by the CPI-U index. In addition, the PRA break-even requirement was eliminated, and the Postal Service was permitted to retain any revenues that exceeded costs. The goals of these changes were to reduce regulatory burdens, increase the predictability of price changes, and ensure that there would no abuse of the Postal Service’s continuing monopolies. Additionally, the new system was intended to increase pricing flexibility, giving Postal Service management more tools to achieve financial stability.
A couple of provisions of PAEA, however, have had the effect of decreasing flexibility, at least in the current environment. First, by directing that the CPI price cap be applied at the level of existing classes, the new law had the effect of locking in pricing relationships between classes of mail as they stood after the last PRA-style postal rate proceeding. Additionally, PAEA partially codified the use of ECP by mandating that postal worksharing-related price discounts could not (except under defined circumstances) be greater than calculated cost avoidance.
Top-down costing
PAEA left intact the requirement that the Postal Service ensure that the revenue generated by each class is sufficient to recover “direct and indirect postal costs attributable to each class or type of mail service.” [14] In a system that has developed over forty years, an attributable cost test been developed based on each product’s long-run marginal cost. Because of this long-run perspective, any product’s estimated attributable cost includes elements that would not be considered part of the cost of goods sold on an income statement (such as product-specific advertising or administrative overhead). It also includes estimates of direct volume-variable costs that are likely to be higher (perhaps substantially higher) than a typical marginal-cost analysis would indicate. On the other hand, because of the nature of the Postal Service’s delivery network, a substantial portion of what would be considered direct costs by accountants is not included in the attributable cost estimates for any one product. Conceptually, this system was an attempt to determine how much of its infrastructure the Postal Service uses to support each product (or, conversely, how much of that infrastructure would not be used if a given product were not offered) rather than what was used to produce the output in a given period.
The net result of this exercise is a set of attributable costs associated with each product, and an “institutional” cost (including, for instance, most of the cost associated with delivery) deemed not to be caused by any one product or set of products, but considered to be part of the cost of maintaining and administering the system as a whole.
In estimating attributable costs, the Postal Service generally uses detailed “top-down” cost models. These models estimate product-specific costs using a number of cost pools associated with different postal operations. These cost pools vary in close relationship with mail-piece shape (i.e., letter-size pieces, larger-than letter-size “flat” pieces, and “packages” consisting of pieces that are larger than letters or flats). These cost pools are tied to the Postal Service’s Time and Attendance Control System (TACS), which collects the data associated with managing daily business operations (i.e., operations in which employees are “clocked into” on their time sheets). The data are then run through the In-Office Cost System (IOCS), which divides the various cost pools by mail classes and products.
In addition, the Postal Service uses a set of workflow models to estimate the cost difference between operations (rather than the cost of each operation). These models trace the path mail takes through its various processing, distribution, and delivery operations. This results in an average unit cost based on the workhours used in each operation and the amount of mail that flows through it. Cost differences between worksharing levels are estimated by comparing the costs of the modeled flows. The Postal Service measures this cost avoidance from processes that require the greatest operational inputs down to the least. To comport with the attributable cost view of the system, these cost avoidances are adjusted to incorporate allocations of the indirect cost associated with each product.
Because of its focus on long-term impacts, this system—as it was intended to do—provides a robust estimate of the ongoing investment in providing different postal services. However, it is less useful as an estimate of changes in cost levels resulting from shorter-term changes in volumes. As a result, these costs may provide signals that result in sub-optimal pricing decisions, especially at the margin, where some contract and incentive pricing is considered. In these situations, a better estimate of marginal cost will enable Postal Service management to make better pricing decisions (in terns of addressing short term concerns).
ALTERNATIVE METHOD
Bottom-up activity-based costing
There are several alternatives to the top-down determination of direct and indirect attributable costs that has been used since the Postal Reorganization Act. One such alternative is an “activity-based costing” (ABC) method that starts from points that are farthers downstream in the netowork working up to points that are more upstream. In other words, this ABC approach determines product costs from points that are least-costly to those associated with greater postal processing and distribution-related inputs and costs. The authors believe that a bottom-up ABC-based approach would provide the Postal Service with a more refined and more accurate estimate of actual costs associated with any postal product.
Under such a “bottom-up” method of costing, the Postal Service would assign costs to products based on a number of attributable activities associated with efforts and resources consumed in the processing, transportation, and delivery of mail. Resources (labor, equipment, materials, etc.) for each activity in handling the mail throughout the nation would be identified and measured. Whatever resources are consumed would be assigned to cost pools by product. The Postal Service would aggregate the cost pools, and their sum would be used as a determination of each product’s cost. This bottom-up approach would negate the need to determine avoided costs (as is done under the current regime) since the product-related mail processing and distribution costs would be fully reflected.
The process would begin with a determination of those categories that required the least inputs for processing, transportation, and distribution. The costs of any additional processing, transportation, or distribution then would be added to reflect any next levels of upstream operations. The total costs associated with each marginal work-related inputs then would constitute the unit cost of the next (any subsequent) defined product.
For instance, a category that is entered at the final delivery unit and that is to be delivered to each address on a delivery route would tend to require the fewest postal inputs to ready mail for delivery. The cost associated with such mail then would constitute the “base cost” of similar categories that are entered at facilities farther upstream, or that need more handling. The Postal Service would add whatever costs as associated with handling mail that is less finely prepared to these base costs to determine each category’s attributable costs. Worksharing, as it is known today, would be replaced by a much more simple determination of all actual product-associated processing and distribution costs. Product costs no longer would be based on cost-avoidance estimates and measurements, but would be inclusive of all relevant processing and distribution inputs.
There are many benefits to such a bottom-up activity-based costing approach. The first is that ABC will enable the Postal Service to analyze the cost implications of the changes occurring to any product mix. The implementation of ABC also can help postal management better understand and analyze the various costs involved with any mail product, model the impact of cost reductions, and confirm whatever savings could be achieved. Activity-based costing will improve the Postal Service’s ability to reveal the true sources of product profitability, which would improve the ability to price products in closer accord with actual market demands and needs. Such an approach also would provide the Postal Service with a sharper ability to analyze customer-specific costs and determine overall customer profitability. With this type of insight, postal management would be better able to segment customers, while adapting process and pricing strategies that deliver more equitable returns.
One of the more important contributions of ABC would be a contribution to the accurate analysis of the cost (and by extension, the profitability) of different postal products. The Postal Service, in its FY 2010 Annual Compliance Report, showed two market-dominant classes (Periodicals and Package Services) and over nine individual products whose prices were determined to be insufficient to cover attributable costs. [15] And while attributable cost is still the legal standard that underlies the long-term cross-subsidy test, a more nuanced view of short-term changes can inform these determinations.
Moving from the current top-down to the authors’ preferred bottom-up approach might create some short-term challenges to the Postal Service. A period of transition might be needed to enable the Postal Service to shift from collecting data under current cost avoidance models to tomorrow’s activity-based cost models. A move to activity-based costing, however, could be facilitated through a more comprehensive use of data that can be obtained through the Postal Service’s various intelligent mail initiatives. An investment of capital investment may be required, and regulatory processes would have to be evolved to make best use of any such change in costing methods. In the short term, a first step towards this goal might be made using currently-existing cost data, simply by re-examining some of the underlying assumptions about variability and adjusting those assumptions to fit a shorter-term time horizon.
Marginal versus average unit costs
The Postal Service has a fixed-cost, capital-intensive network that is not fully utilized for various economic and public policy reasons. (Indeed, the Postal Service has been criticized as having more postal facilities and personnel than is actually needed to sufficiently serve the nation’s continuing postal needs.) The USPS currently monitors and reports costs on an average unit level. An argument can be made that the Postal Service should analyze costs using two different models – one that measures total product unit costs or average unit costs, and one that measures marginal cost, i.e., the total volume variable costs associated with handling each next unit of mail. [16] marginal costs enable the Postal Service to look at long-term and short-term costs in a way that could have less impact on short-term decisions such as specific product pricing or sales.
There are numerous benefits of analyzing costs under different models. With the Postal Service’s existing economies of scale handling one additional unit of mail is likely less costly than the average of previous units. Knowing marginal costs would give the Postal Service more freedom in pricing products and contracts in the short-term to generate additional volume and revenue. Prior to PAEA, the Postal Service, in “negotiated service agreements” (NSAs) cost models, would show a mailer’s average unit cost compared to some national average unit cost. [17] The nationwide average cost does not reflect the realities as they exist at the typical business customer level. No mail-using business customer provides the Postal Service with just one product. Mailers use an array of products, and therefore have unique contribution profiles that are never accounted for in Commission proceedings. In capturing and applying customer-specific marginal costs, the Postal Service could create a contribution-maximizing price schedule for each customer where the last piece’s marginal cost equaled marginal revenue.
As the Postal Service pursues a two-method approach, it would continue to monitor its capacity. If the capacity of the network is reached, the costs for an additional unit might increase. The Postal Service, in recent years, has begun Area Mail Processing (AMP) studies, which evaluate the consolidation of various facilities. It also has begun to evaluate post offices and where there are redundant locations. Most recently, the Postal Service revamped its Bulk Mail Centers into Network Distribution Centers (NDCs). According to the Postal Service, “this network consolidates the processing of originating mail into fewer sites to increase operational efficiency, decrease cost and maintain excellent service while expanding the surface transportation reach for more products.” [18]
The use of marginal cost estimates in some situations does not mean the Postal Service or the regulator can abandon estimates of attributable cost altogether. As noted above, the long-run focus inherent in attributable cost estimates provides a more robust view of the ongoing investment involved in providing various products. This estimate in turn, is used along with product revenues to ensure there is no cross-subsidy between products (especially between market-dominant and competitive products). This is a keystone of the current postal regulatory philosophy, and needs to be maintained. However, also using marginal cost estimates is not contradictory to this approach, and provides additional tools to Postal Service management.
Market-based pricing
Paradoxically, a better understanding of marginal cost would enable the Postal Service to focus much more on other elements of value, and to refine its schedule of products. Such a redefinition from broad categories of mail to more finely differentiated product offerings would allow the Postal Service more flexibility in pricing and would enable it to price products more closely in accord with actual market demands and conditions.
Since PAEA, the Postal Service has been allowed to earn and retain revenues that exceed costs. This enables the Postal Service to become a more profit-driven enterprise, subject to the control imposed by a CPI-related price cap. While PAEA clearly intended the USPS to be profitable and self-sufficient, its current product mix and pricing are notably hindered by pre-PAEA ideas of cost coverage and mark-ups instead of a more market-based approach.
The authors advocate a greater emphasis on market-based pricing set largely by conditions of supply and demand. With this kind of approach the Postal Service would be better able to tailor offerings to individual customer circumstances. This could lead to situations where mailer postage costs are altered (either up or down), depending on the relative advantage of additional mailer preparation, or on capacity limitations (or lack thereof). Operationally, the Postal Service would be better able to balance workload and establish a more efficient management of resources under a market-based pricing regime. Essentially, the Postal Service could send price signals for the most efficient operations. By re-engineering its cost structure and using market-based pricing, the Postal Service would allow mailers to make business-based decisions on any mailing and entry profile. [19]
However, such a system will also result in some mailers paying higher prices as the Postal Service rationalizes its network, or takes advantage of inelastic demand characteristics, regardless of cost efficiencies. But by using short-term, as well as long-term estimates of both cost and revenue changes, the Postal Service will be better able to understand where customers balue premium postal services, and what the true impact of those decisions will be on the bottom line.
Under such a system, it would still be necessary to set prices to satisfy the attributable-cost floor provisions of the law. However, for the vast majority of commercial mail, increased pricing flexibility would expand the scope for tailoring prices to reflect market demand.
APPLICATIONS OF NEW METHOD
Expanding information based services
One of the key purposes behind the use of the Intelligent Mail barcode (IMb) was to provide the postal community a “track and trace” capability. It provides the Postal Service with a means for measuring and reporting service performance, while providing some valuable tools for better managing its own operations. With the introduction of the IMb, the Postal Service has opened the door to the creation of new products and services that can add even greater value to mail, provide more precise information to mailers, and offer other customizable services. Expanding the use of information based services beyond service measurement and reporting, by developing new products that rely on this information, will help increase adoption rates and provide the Postal Service with new pricing flexibility and opportunities.
Expanding information based services by tracking mail costs through the various stages of operations would provide a better method for capturing product-specific costs than the current costing mechanisms. A bottom-up activity-based approach to costing would create a more precise look at the true cost of handling products, teamed with information based services that could provide the Postal Service with real-time operational data that could enable the Postal Service (and industry) to work to keep costs down (and ultimately product prices). The tracking of mail could be expanded to the piece level, and give the Postal Service the ability to create customer-specific costing associated with the plants at which mail is accepted, the machines on which it is processed, and the manner in which it is distributed.
Another benefit would be to enable the Postal Service to better segment its customers and offer more finely tuned market-based pricing for financial, as well as advertising, marketing, and product fulfillment services with a clear appreciation of the actual costs of serving these segments. It would afford the Postal Service an understanding of market test costs and profitability, beyond that of today.
TIMELINESS OF PAPER
In looking ahead at the opportunities and challenges that face the Postal Service, one must realize that simply maintaining status quo is no longer acceptable. Investments need to focus more on information technology and how it fits into the current organization and network. The USPS needs to begin to price products that maintain a market based appeal or it will cease to be an effective marketing alternative for businesses. Having ready access to accurate marginal costing will be key to making the USPS a more profitable business venture.
The sheer pace of technological innovation in electronic communications has outpaced the Postal Service. While electronic communication costs continue to decrease for businesses, postal costs continue to increase. As a quasi-government agency, the Postal Service is statutorily restricted in some aspects, but has been granted numerous flexibilities through the passage of the Postal Act of 2006
RECOMMENDATION
First, we examined the current costing and pricing system and showed their inefficiencies and flaws. Next, we summarized an alternative to these systems through bottom-up activity-based costing and market-based pricing. We, then, introduced applications that spawn from these alternatives through a reclassification of mail offerings and expansion of intelligent based services.
We recommend that postal stakeholders strive for:
- Implementation of bottom-up activity based costing
- Greater adoption and investment in intelligent based services
- Development of marginal costing tools
- Re-engineering of the regulatory philosophy on historical pricing relationships
- De-coupling of price setting from costs
- Use of customer specific pricing to generate additional revenue
- Re-evaluation of product offering
If postal stakeholders adopt these recommendations, it transcends “business as usual.” It is essential that this work be undertaken to promote a greater understanding of costs, to alleviate inefficiencies, and to promote market flexibility to respond to the changing needs of mail. The nation’s postal system is now and is likely to remain a very important part of our communication and information infrastructure. However, the role of mail will continue to change to reflect its usability and compatibility with its electronic counterpart.
Endnotes
[1] USPS 2010 Report on Form 10K. http://www.prc.gov/Docs/70/70828/2010_10K_Report_Final.pdf
[2] USPS 2010 Report on Form 10K. http://www.prc.gov/Docs/70/70828/2010_10K_Report_Final.pdf
[3] USPS 2010 Report on Form 10K. http://www.prc.gov/Docs/70/70828/2010_10K_Report_Final.pdf
[4] USPS 2010 Report on Form 10K . http://www.prc.gov/Docs/70/70828/2010_10K_Report_Final.pdf
[5] §8909(a)(3)(A)
[6] According to the Postal Service, “workers’ compensation costs are highly sensitive to discount and inflation rates and the length of time recipients stay on the compensation rolls.”
[7] USPS 2010 Report on Form 10K. http://www.prc.gov/Docs/70/70828/2010_10K_
[8] USPS Form 10-Q, FY2011 Q1. http://www.prc.gov/Docs/71/71896/Quarter_I_2011_Final.pdf
[9] USPS Form 10-Q, FY2011 Q1. http://www.prc.gov/Docs/71/71896/Quarter_I_2011_Final.pdf
[10] USPS 10Q, FY11Q1: Despite an increase of 693 million pieces, or 1.6%, for First-Class Mail and Standard Mail combined as compared to the same period last year, revenue dropped by $211 million, or 1.5%, as the product mix shifted significantly.
[11] Such efforts include: Area Mail Processing (AMP) studies and Station and Branch Optimization and Consolidation Initiative.
[12] In the pre-PAEA pricing regime, these markups were explicitly set. In the current regime, they are a residual of the price-cap process. This is discussed in more detail below.
[13] Largely as a matter of administrative convenience, because the regulatory procedures were quite onerous for all involved, this price-setting was typically based on a three year cycle, where the test year began about one year into the future, so that “excess” revenue in the first year after a price change would balance out expected losses in the third year. There were many exceptions to this rule, however.
[14] §3622(c)(2)
[15]First-Class Mail Parcels, Inbound Single-Piece First-Class Mail International, Standard Mail Flats, Standard Mail Parcels & NFMs, Within County Periodicals, Outside County Periodicals, Single-Piece Parcel Post, Bound Printed Matter Parcels, Media Mail/Library Mail.
[16] Business mailers do not enter only one piece of mail as the next unit; they enter large quantities, such as one thousand, one hundred thousand, or one million pieces.
[17] It should be noted that the PRC considers every NSA as a separate product for regulatory purposes. As a result, the Postal Service must price each contract so that it will, at a minimum, cover its estimated attributable cost (usually determined based on estimates of the nationwide average unit attributable cost for the whole product)
[18] USPS Network Distribution Centers. http://www.usps.com/networkdistributioncenters/welcome.htm
[19] An entry profile is the entry points for which a mailer enters mail at destinating postal facilities throughout the country. It is unqiue to each mailer and may change based on mailers’ ability to adhere to postal rules associated with specific destinating facilities.
