Why the Post Office Stamp Rate Increase Could Hurt Them in the Long Run

forever stampsRumor has it the cost of mailing your bills is going up again. The Post Office is talking rate increases on stamps of as much as 2 cents come 2011.

And get this: The post office wants us to think this is a good thing!

Says their press release on the proposal:

"It would be the first stamp price increase in almost two years."

(Emphasis is mine.) True, it's been two "whole" years since it went up, but a hike from 44 cents to 46 is a 4.5 percent rate hike.


That's double the current rate of inflation.

The problem is, of course, the major budget gap in the postal service. They're estimating a $7 billion shortfall next year, despite cutting 1 million man hours and reducing expenses by $1 billion each year since 2001.

So stamps will go to 46 cents, post card stamps will go up to 30 cents, and a host of other rates will jump.

This rate hike, if approved by the independent Postal Rate Commission, would make the post office an estimated $2.3 billion by September next year.

But if flagging postal service usage in light of the economy is driving the service shortfalls, then what's to say companies won't simply cut more if the rates go up?

And if you're already cutting man hours -- aka services -- who's to say you haven't driven the bulk of customers away for good?

The USPS would do better to play to their strengths.

The post office works on a model that they have us over a barrel -- we can't help but use them. But when they spend millions on advertising to try to compete with the likes of UPS and FedEx (remember the creepy clown?), they're throwing good money after bad.

Remember, we know you're there? We're stuck with you? You shouldn't have to advertise so heavily.

Instead the post office would be wise to throw that same money into improving service for its customers. Those cut man hours, for example, have largely made it impossible for citizens to USE the post office.

If you can't get into the post office at 5:30 after work to mail your car loan payment, how are you going to pay the bill? That's right -- online.

Will this rate hike drive you further from the post office?


Image via USPS.gov

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