This is a classic. What do you do if you own a business that is dying. Dying due to competition that is offering the same basic service for a much, much lower cost. Many of us use email to correspond with one another. We pay our bills online. We send our Christmas, Birthday cards, etc. Electronically. To stay in business we would make necessary cutbacks. That means like most business we close our less profitable outlets or manufacturing sites. We lay off people. We cut back on benefits. I don’t like any of these things, but that is what is really happening in the business world.
The United States Postal Service is still a needed service, not just so much as it once was. I have not seen any of the aforementioned steps being taken. They are saying they will stop Saturday delivery. But they have not said anything about the employee’s pay being cut for the extra day off. We know that the pay scale for postal employees has always been higher than in the private sector. The Benefits better, the retirement better. Good for the employees. As long as the USPS can afford to pay all this, fine.
But looking to the long term. If I own an automobile dealership, and I charge more than other dealers of like vehicles. Where would you go? Pay more at my dealership, or go across the street, and buy the lower priced vehicle. What do I do. The USPS says we’ll charge more and make up the difference. Now they don’t have to have as many customers, to maintain their profit. Meanwhile the guy across the street is selling more units at less cost per unit, but is making a larger bottom line profit, due to his increased volume. They even have unknown cost to customers. How many of you have mailed a birthday card only to find out you had insufficient postage. Why? Because the envelope is 1/16 of inch larger than allowed thus incurring a ‘SPECIAL HANDLING” charge. This means the card didn’t fit through the sorter, and someone had to actually pick it up to put in the bag.
So is the answer keep raising prices. Or lower the prices and increase volume.
That Is How I See It.