How does the Postal Service selling “forever stamps” generate additional revenue or reduce their operating costs? It seems like it would decrease their revenue since it negates postal rate increases to a certain extent.
Don’t get me wrong, it’s great for consumers, but it’s not like there is any real competition to first class mail delivery in the US.
Given how much money they are losing each year I can’t see a good reason to give something away that they could otherwise charge for. What am I missing?
Also, from this article by law postage rate increases must be less than the rate of inflation. Therefore over the long term, the Post Office will benefit from people buying stamps now rather than later. While it’s possible for a stamp buyer to make a profit in the short term by buying immediately before an announced price increase, I doubt enough people bother to make any big impact.
I get the idea it’s more a customer service thing than anything else. People HATE having their stamps made obsolete and having to buy a bunch of 1 or 2 cent stamps every couple of years.
Some people are dumb enough to “invest” in Forever stamps. When they first came out there was a story of a guy buying 10K worth of them.
If you buy the stamps now, the postal service can invest that money now, or blow it all on hookers and parcel tape, or whatever, rather than having to wait.
Plus there’s quite a good chance that some of the stamps will be hoarded, collected, lost or thrown out, which means the postal service won’t even have to provide mail delivery for the money (though I believe stamps sold but not used are noted on the accounts as a liability).
In the UK last year postage rates went up by almost 40% overnight, from 36p to 50p for second-class mail, which made buying NVI stamps (Non Value Indicator, our equivalent of forever stamps) a pretty good investment. Heck, you could buy a load, sell them on eBay at a discount after the price went up and still make a decent profit after fees.
Retired Postal guy here, many years at the stamp and parcel windows. The Forever stamps eliminate many problems and much confusion at rate increase time. Small denomination stamps in the hundreds of thousands (millions, nationwide) must be printed, distributed, and made available to the public. Usually this required extra help, if not overtime, at least taking someone away from other duties. In the mail stream postage should be verified, items using odd stamps can be held up. At such times people would dig out a collection of unused stamps to add various amounts to make the new rate. I regret we did not have these Forevers when I was working.
It’s a political matter that the Post Office is the only agency required to pre-fund its pension obligations, some of them extending out almost to the end of the 21st century.
On an operating basis, the Post Office actually makes money in spite of serving rural areas UPS, FedEx and others would never touch.
It also saves on printing and storage. When there is going to be a rate increase new stamps had to be printed up and help for release just before the rate increase. And after the rate increase the old stamps would stop selling.
With the forever stamps no changes have to be made in printing, except maybe a bump in sales just before the rate increase. And after the rate increase they now sell the same stamp. No need to make a new stamp, print it and store it. The only operation change is just charge more for the samestamp.