Stamps

Stamps are a pretty bad idea. A letter to a distant rural area costs me the same as a letter to an apartment down the street in a big city, provided that they are in the same weight category. But does it cost the carrier the same? Isn't it more expensive to drive to the far away town than to drive down the street? Yes, I checked.

By working in the UPS store, I learned that UPS and Fedex do not go solely by weight, since that price does not reflect the difficulty of shipping a given package very well. They use a host of variables, including weight (naturally, since that is one legitimate factor), but also the distance of the shipment, bulkiness of the package measured by dimensions, speed at which the consumer wants it there, insurance on the item, and a couple others.

People cannot even pay the post office for some of these variables, but can pay for others. I can send a first-class letter or the faster "priority mail" through the Post Office, which tells me that they think speed is a variable which, if altered, changes the nature of the transaction. So they do admit that speed matters, but deny in practice that distance does, when really it seems that distance would be easier to guess the rates for.

I suppose the thought process is, "a letter is a letter, is a letter." Well, the very acknowledgment of speed destroys that. And anyway, that misses the whole point. We would never use the "an X is an X" in other circumstances. When I am at a restaurant, I don't say to the waiter, "Look buddy, a meal is a meal, and you want to charge me $14.95 for a steak, when the chicken is $11.95?"

The price of an items reflects the difficulty in offering it. It is not as if that information is good for its own sake. There is not some warm fuzzy feeling of aligning the price tag with its "true cost," which changes constantly anyway. It actually makes people operate more efficiently. If you are shipping an item through UPS with a box much bigger than the item so that there is extra room inside, and you see the high price due to the large size of the box, you might find it worth to invest in a smaller box. That leaves more money in your wallet and more room in the shipping truck. Maybe you will ship something that fits snugly in the big box later.

The real lesson is, businesses that allow prices to do their job will beat businesses that do not, since the latter is losing money (or making lower profit) when prices are lower than the cost to the business, and not attracting consumers when its prices are higher than other businesses'. But the US Post Office stronghold does not allow this system to work.