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Comment by bodyfour | Hacker News Reader

The full story is more complicated. The USPS is in an unattractive position of being supposedly independent of the taxpayer's money, yet any major operating issues are at the whim of Congress. Predictably, it goes like this:

  USPS: "Volume is down, we need to raise prices."
  Congress: "Nope, sorry"

  USPS: "Uhm, ok.  We'll have to cut Saturday delivery then..."
  Congress: "No can do, sorry"

  USPS: "Well I guess we have to close a bunch of post offices at least"
  Every member of Congress in unison: "Sounds great, but not in my district"

etc...

I'm a big fan of the USPS -- I've found them to be more reliable than UPS and FedEx by far and they're amazingly inexpensive to boot. They know what they need to do to fix themselves, but sadly it seems to take a crisis before Congress will get out of the way and just let them do it.

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Not even a crisis will convince Congress to let them do it. I mean, look at what happened with the budget.

They are insane if they raise prices when volume is going down. The only thing that will happen is that the volume will go even further down.

Oh really? What if they raise the price of postage on First Class mail by one cent. Would you look at the stamps, scream bloody murder, and stamp (hah!) out of the Post Office?

Sure, increase prices, and demand will fall, but it's not perfectly linear, and even a one cent increase boosts revenues considerably.

If you increase prices and demand falls enough, you don't get a revenue boost. Upon one USPS increase, they lost my business altogether (save for maybe 5 stamps per year, instead of 120); a one cent increase cost them a lot more.

Really? I hope you're not talking about first-class postage: http://en.wikipedia.org/wiki/File:US_Postage_History.svg

That's silly. Of course volume would drop marginally if the price increased marginally. Why do you think you know whether the relationship is linear?

Why do you assume that demand for USPS mail is elastic? (at the current low price point anyway)

Right. So pedantry wins. The point is that there is some number of pennies after which the demand is elastic notwithstanding the original poster's indifference to a one cent price increase now.

What class of letter(s) would not be sent if prices went up?

The class for which there is only a marginal benefit to sending it in hardcopy vs. email. Or the class of items whose delivery could be delayed long enough to combine it with another item.

Yes, and what type is that? Got an examples.

Here are some types of letters that won't fall under that:

* Birthday/Christmas cards. The postage is a small fraction of the card. * Legal-y letters, (e.g. when you make an offical complaint ), since the price of the stamp is again a tiny fraction of what you're complaining about. * Big padded envelops of A4 print outs of contracts or something (again, postage is insignificant)

Most utilities are switching to electronic billing, and/or charging for paper billing, so they are already getting rid of postage.

What other post is that price sensitive?

Are you really arguing that the demand for first class mail is completely inelastic based on my lack of examples of what the marginal cases are? After some number of pennies of increase, demand will fall - are you actually disputing this?

All you're arguing is that there are some pennies of increase which could increase revenue. Fine. That's not saving the post office.

> Would you look at the stamps, scream bloody murder, and stamp (hah!) out of the Post Office?

Maybe not me and not by one cent but eventually, if they keep raising the prices, I would look at the price and think, "hmm this is getting kinda pricey. I wonder what UPS would charge to deliver this..."

You can go check. USPS has a long way to go before it comes close to the prices UPS and FedEx charge. It's like comparing coach to business class airline tickets for the vast majority of mail. The postal service is truly an amazing service for small parcels within the United States.

That is why I said "eventually" ... it will be more than one cent and it will happen slowly. As price keeps cropping up some people will choose to use other services.

A whole heck of a lot more. Have you ever tried mailing an envelope via UPS? We're talking orders of magnitude difference in price.

USPS could double their first-class rates, and they'd still be undercutting the competition.

I personally doubt that the drop in volume is all that much related to prices. If they cut the price of a first-class stamp in half, mail volume would not go up much, because what we mail vs what we call/e-mail/fax/whatever is almost always based on capabilities, not cost. Likewise, if the price of a first-class stamp went up by 50%, I really don't see the extra 22 cents (or whatever it would be now) influencing all that many people to stop sending mail. A letter is already vastly more expensive than an e-mail. It seems to me that those items which are being mailed are those items which more or less have to be mailed.

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