Forever Stamps

In light of the Postal Service raising postage for first class mail by 1 cent in May of 2008, the concept of the "Forever Stamp" makes more sense for both the USPS and the end user. The USPS created the “Forever Stamp” in April 2007 as a way for consumers to lock in the price of a first-class stamp no matter how much, or how often, the price increases. The Postal Service described the stamp as "a consumer innovation guaranteed to deliver unprecedented convenience and value to our customers."

For the end user, the "Forever Stamp" reduces the hassle of sending mail after a rate change. It seems that whenever rates change, you always have a partial book of stamps at the old rate. If you want to mail something, you have to track down one-cent stamps to make up the difference. This requires a trip to the post office to either wait 10-30 minutes on line to buy stamps, or you end up with a couple of dollar coins in change from the stamp-dispensing machine. Neither one of these sounds like a great option.

The "Forever Stamp" is like a stock option on the increase in postal rates and inflation. The great thing is that this option is always in the money, you are guaranteed to make a "profit". If you buy the "Forever Stamps" as a cheap as possible and hold them longer the larger the profit. Granted the annualized rate of return will probably be something like 2%-4%, not including inflation. Most of the "profit" would come from a reduction in the hassle factor.

The great thing about the "Forever Stamp" for the Postal Service is it that fewer man-hours are required to implement a change in postage rates. When rates change the Post Office probably spends quite a bit of time returning letters that have the incorrect postage on them. If they can get the majority of mailers to use these stamps, imagine how much time and money they can save not having to return letters. The other potential cost savings could come from printing fewer one-cent stamps to make up the difference in postal rates. Overtime the USPS probably makes up for any lost revenue with the "Forever Stamp" on cost savings from labor.

Prices for postcards, large envelopes and packages, will see price increases between one and five cents in May. The price for shipping services including Express Mail and Priority Mail will be announced in the coming months.

For additional information > Stamps Increasing by One Cent to 42¢ on May 12