A Penny for Your Thoughts?

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Half a penny for your throughts (picture of scissors cutting a penny)

Stamp prices are traditionally in whole cent increments. That means it is difficult to target a particular percentage increase. For instance, a one-cent increase on the 42-cent stamp would have been 2.4 percent; while the two-cent increase was 4.8 percent.

Postal price increases are now limited by an inflation-based “cap” for each class of mail, and in First-Class Mail, the price of a stamp is a major component of the average revenue per piece for First-Class Mail. As such, the price change for the “stamp” plays a large role in the calculation of the average for the class. Other prices in First-Class Mail have to be set to bring the average back to the cap. This can make it difficult to meet many of the other pricing objectives in the class such as setting workshare discounts equal to the cost savings. It might be easier to meet the objectives if the stamp price were in a smaller increment.

In any event, how important is it that the stamp’s price is in whole-cent increments?

Which of the following statements best expresses your opinion?

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Since stamps are generally purchased in booklets or coils does it matter whether the individual price is rounded to a penny? Could increments larger than a penny be accommodated in the price cap environment? What other issues should be considered regarding the stamp price?

This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).

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Permalink | Comments (18) | Oct 5, 2009

 

 

18 Responses to “A Penny for Your Thoughts?”

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  1. 18
    Julie Says:
    July 24th, 2010 at 10:14 pm

    Increases in one penny at a time.

  2. 17
    peterbeagle Says:
    April 29th, 2010 at 11:00 am

    If I understand correctly, junk mail isn’t a big money maker for the PO. Eliminating, or significantly raising, bulk costs, can eliminate most junk mail. It also helps save paper.

    Five-day delivery makes a lot of sense, but keep Saturday, eliminate Tuesday. Keep some POs open for 6 days.

    Also, 50-cent stamps for letters to be hand-delivered anywhere in the US would still be a pretty good deal!

  3. 16
    wingv Says:
    April 27th, 2010 at 10:50 am

    It seems to me that major savings are available by dramatically increasing the mailing costs of bulk rate (junk mail, advertising, periodicals, etc). During a recent holiday, we put our home delivery on “vacation hold” for a week. Upon our return, we picked up the accumulation of mail at the post office. Well over 90% (by weight) was unsolicited junk mail that the postal carriers would have toted to our front door.

    I believe that if the rates for this class of mail were raised substantially, many of these companies would move over to the internet (or other media) to advertise their products and services. This would result in less business for the USPS and this would probably be a good thing. First, as a result of less bulk, fewer carriers would be needed, carriers could probably cover larger routes, and carriers could probably deliver faster. Obviously if there was less bulk, fewer trucks would be needed to move it, less warehouse space would be needed, handling and processing would decrease, etc. Fewer trucks, less fuel, maitenance, etc. Oh by the way did I mention that the customer would be happy not to have to dispose of pounds of junk mail? Less in the landfill, etc.

  4. 15
    Victor wood Says:
    April 27th, 2010 at 10:15 am

    You must cut costs immediately! To do this:

    Go to a five day work week.

    Close the 25% of your worst performing Post Offices within five [5] miles of another.

  5. 14
    jrkakapastateradio Says:
    January 28th, 2010 at 12:37 pm

    jkbeck,
    I missed this post. CLASSIC DUDE!!!!!!!!!!!

    This is almost as good as when I was sending the
    pre-paid envelopes to my late brother, long ago.
    I simply scratched out the adressee, and wrote his
    on the pre-paid Credit Card Offer envelope!

    I think I remember getting one back once with a snarkily note written on it…
    “Next time try a stamp pal”.

    What I did was probably illegal. But, the point I was
    attempting to prove was who was at work.

    You see, over regulated, unlike banking, the postal system sadly is ripe for fraud and abuse.
    However, give away programs, like “free” boxes, are designed to promote growth.

    I personally believe that the USPS is finished.
    Not that they’re going out of business. But, that
    the energy required to send personal packages
    does not appear to fit our children’s future.

    To cite confirmation of this I merely point to
    the recent Applications by two technology companies.

    If you can read a book delivered to your wallet,
    almost anywhere in the metropolitian world simply
    imagine the capabilities.

    If you want to send Aunt Molly in Houston a generic package of oranges from Florida, do you really think
    that your personal cute little “future box” of citrus is going originate from the St John’s River area?

    Yeah sure, it might have been grown there. But, your
    local distribution point is going to create the
    wooden box, and bubble wrap. (my estimate within 300km.
    EVERYTHING THAT USES ENERGY TO ACCOMPLISH IS GOING TO
    CHANGE FORVER. AND LIKE IT OR NOT, CARBON CREDITS
    AND CAP & TRADE WILL CRUSH THE CURRENT USPS STRUCTURE.
    So I wouldn’t worry too much about the ink on the boxes.

  6. 13
    jkbeck Says:
    October 26th, 2009 at 10:00 pm

    Several years ago I purchased a halloween costume for my son. At the time I ordered, the company told me they could not mail my purchase with the USPS. When I received my package, I was extremely mad. I was charged double the shipping, (it came by UPS), and the company I ordered it from, put my son’s costume in a FREE US Postal Service priority box. They had turned the box inside out and mailed it to me. My suggestion: the Postal Service needs to charge all customers (for example $3.00) for each box they want. WHen this customer returns to actually mail it, they will be given a $3.00 CREDIT towards mailing cost. The USPS is giving out free stuff with out and income. Just a suggestion. Thanks!

  7. 12
    RBriarcliff Says:
    October 22nd, 2009 at 5:40 pm

    As I have seen with many companies, the USPS needs to be customer focused to make money.

    I have three suggestions. 1) Simplify the rate structure. My biggest gripe is having to drive to the PO in this day and age just to weigh a letter because it might be heavier than an ounce or slightly outside certain “normal” dimensions. I would rather pay a penny or two more on the first ounce if I could just know it was flat fate for letters up to a certain much larger size (people have rulers. they tend not to have oz scales). 2) Partner with Hallmark and other card vendors to sell prepaid envelopes. I am not sure logistically how this could be done, but I am sure Hallmark could have a wall behind the cash register with colorful envelopes which match standard card sizes. This way, the consumer does not worry about weight and size, no stamps need to be printed, and the post office can set the price upfront with the card vendor to the extent of maybe even making the cost “included” in the card price. Once again, I do not have to expend extra effort to find and buy stamps. A lot of card stores already have PO boxes outside, but making sure that they do (maybe make sure they have it inside the store) would be great. 3) really market the personalized stamps. Once again, Hallmark and other card vendors could have in-store machines (no weights or packages–cards only) with SD/MMC, etc slots to read a digital image and print the postage. The machines could also print international postage.

    Personal letters are becoming a thing of the past. Card stores and the USPS should partner together on this front since they have the same objective when it comes to personal mail.

  8. 11
    Nostradamus Says:
    October 21st, 2009 at 7:39 pm

    I think that the price of the stamps need to go down anyway!!

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