How Can the Postal Service Reduce the Costs Associated with Postage Stamps?
Filed under Finances: Cost & Revenue
How much does it cost to develop, print, ship, inventory, secure, sell, and cancel a stamp used to mail a letter? What about the stamps that are never sold? The Postal Service destroys billions of stamps each year because they are obsolete. In FY 2008, the Postal Service printed 37 billion stamps, which cost $78 million to print. In that same year, they destroyed old stamps, some of which were printed more than 10 years ago, that were valued at approximately $2.8 billion. Those stamps were printed, shipped, counted multiple times in various inventories, and finally shipped back for destruction under secure conditions. How much does this cost and does the Postal Service benefit from the expense?
Are there better alternatives to stamps? Business customers often rent postage meters and use permits for bulk mail. Now, the advent of online postage vendors has given individual customers an alternative to stamps. Customers that use online postage can customize their postage and incorporate approved language or pictures.
Loading ... Loading ... Loading ...Not everyone has access to a computer. What can we do for people who do not have access to online postage or who simply do not want to use online postage? One answer may be simplifying the Postal Service’s current stamp inventory. What if all postage stamps were “Forever Stamps”? Stamps would never become obsolete and have to be destroyed, and production costs would never eat up their contribution to overhead. After a rate increase — now generally an annual event rather than every 3 or 4 years — there would be no 1-cent or 2-cent stamp shortages or rush to produce the next generation of denominated stamps.
What about stamp collectors? Would philatelic sales suffer if the Postal Service reduced the denominations it offered? Commemorative Forever Stamps could be issued in limited quantities to satisfy collectors. Some commemorative stamps could be sold locally, while others could only be ordered and shipped direct from a central location. Forever Stamps that marked holidays or other special events such as birthdays would be very useful for people who wanted to stock up. And what could be more appropriate for wedding invitations than “Forever Love” stamps?
Do you know of a better method of postage payment, convenient and available to everybody that could be implemented?
Tell us what you think.
This topic is hosted by the OIG’s Field Financial East directorate.
Topic was revised to indicate that 37 billion stamps not $37 billion worth of stamps were printed in 2008.
110 Responses to “How Can the Postal Service Reduce the Costs Associated with Postage Stamps?”
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January 27th, 2010 at 4:08 pm
@Common Sense – Thanks for your comment. Would the print on demand also include stamps for collectors?
January 27th, 2010 at 4:07 pm
@Truthbetold – Thanks for your comment.
January 27th, 2010 at 4:06 pm
@DJH – Thanks for your comment.
January 27th, 2010 at 4:05 pm
@ej72 – Thanks for your comment. Using meters was just one alternative we included to stimulate discussion. We are not recommending or suggesting one or none. We also mentioned expanding Forever stamps.
You mentioned needing a high denomination for express mail. If your customers come to the office to mail an express mail package, do they really need an express mail stamp? Could you use a PVI? Or do most of your customer’s purchase express mail stamps and drop off the package?
Just curious.
January 27th, 2010 at 3:23 pm
@Tired PTF – Thanks for your comment.
January 27th, 2010 at 3:22 pm
@Diddy – Thanks for your comment. You are correct, but does that mean we should order more simply because it is cheaper and then incur additional cost to destroy them?
January 27th, 2010 at 3:20 pm
@Larry – Thanks for your comment. No, we want collectors to continue collecting stamps and generating revenue for profit. We just wanted to stimulate a discussion about stamps and their use.
January 27th, 2010 at 3:14 pm
@Andy Kubat – Thanks for your comment. With the exception of “Forever” stamps the majority of the stamps have a denomination on them. When the rate increases it is highly unlikely that a customer will choose to put two or three stamps on a mailing versus one stamp with the current denomination. However, if there are no denominations stamp destruction would be minimized.
We like the two tips. Those appear to be very good marketing strategies that could generate more revenue for USPS.
January 27th, 2010 at 3:09 pm
@Skippy – Thanks for your comment. In regards to comment about stamp envelopes, postcards…..Since you know you will never go through what you order, have you considered returning the unused inventory to the SDO for redistribution instead of waiting for the item to become obsolete and sent in for destruction?
January 27th, 2010 at 3:03 pm
@Anonymous – Thank you for your comment. The gift card idea is very interesting. We have heard about virtual mail. Unfortunately, that is through a private company.