Wednesday, March 28, 2007

Forever Stamps. It's About Time.

There have been many posts recently on the topic of "forever stamps". These stamps, recently introduced by USPS, are good for sending one letter regardless of the price of a stamp at the time of mailing. You could use these stamps the day you buy them, or any time thereafter no matter how the price changes over time. It seems that most PF bloggers are of the opinion that forever stamps are a bad thing, because they would facilitate more frequent stamp price increases. I am on the other side of the fence, and here is my reasoning:

By buying a stamp you are paying for service at the time of purchase. That service is the mailing of one letter. By not using your stamp immediately all you are doing is giving the post office a credit line. Generally speaking, when you give someone a credit line you expect to receive some form of benefit. For example, you put your money in a savings account, and you get interest. BUT if you give credit to the post office they punish you by charging you more when you actually want to use the service for which you already paid. If my company could get all of our customers to pay for their purchases upfront, and only take possession of their goods months later, our CFO would throw a wild toga party. Can you imagine that on top of getting our money upfront, we would try to charge customers for a price increase after the fact?

But it does not end there. The forever stamp is also good from the post office's point of view, since it would encourage people to buy larger quantities of stamps upfront. It stands to reason, that a certain percentage of stamps purchased in this manner will never be used because they are lost, accidentally destroyed or simply forgotten. By not offering a forever stamp, the post office is encouraging people to buy smaller quantities of stamps, thereby reducing the number of stamps purchased but never used. I am guessing that the value of such orphaned stamps is probably 1% to 3% of stamps in circulation. The more stamps in circulation, the more orphaned stamps.

The bottom line: customers who have paid for stamps should not be forced to pay for price increases after the fact. The post office benefits from both the unbelievable payment terms its customers are willing to furnish and from the fact that more stamps will be purchased but left unused. So, unless you are one of those who regularly loses stamps, a forever stamp is a good thing for you.

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