Why Isn’t the U.S.Postal Service Profitable?

By Paul Johnson, President CMS – Complete Mailing Solutions

“Have you ever wondered why the USPS isn’t profitable?”

What if Congress passed a law requiring businesses to prefund employee healthcare and pensions for 75 years in advance? Can you imagine how that would impact your company financially? It’s interesting that Congress requires 100% funding for 75 years in advance for the USPS when,according to The Motley Fool,the U.S. Government is only 42% funded.

But, wait, there’s more…

  • What if you couldn’t increase your pricing based on changing market conditions (such as rising fuel costs or competitive pressures)?
  • What if you were required to distribute your goods/services to a broader market, even if that market was unprofitable?

If you’re like most executives you’d say: “No way! We can’t survive in that environment!”

Welcome to the Postal Service! These are just a few restrictions that the USPS must grapple with. Each of these individually would have a significant hit to the profitability and sustainability of a company. Collectively, they’re nearly untenable.Profitability image shown by magnifying glass and chart
Remember, the USPS does NOT receive and revenue from the American taxpayer, their only source of revenue is for products and services!
And the list goes on:

  • They cannot add a fuel surcharge to pricing (as FedEx and UPS can) to maintain profit levels.
  • They are required to provide service to people and businesses in remote areas even though it may be highly unprofitable. In fact, the USPS delivers packages for UPS and FedEx in geographic areas UPS/FedEx consider unprofitable.
  • Although the USPS is not a government entity, it is governed by Congress and the Postal Rate Commission (PRC), which restricts potential avenues for expansion into other products and limits competition with other companies (such as UPS and FedEx). Congress has been influenced by competitors to get the USPS to abandon new products. Here are some examples cited by The Motley Fool:
    • Plans to develop an online payment system in 2000 were scuttled when the Internet industry cried foul.
    • Public copy machines.
    • In-store sales of phone cards and money transfers.
    • Selling postal meter cartridges (Pitney Bowes objected).
  • The USPS is required to invest exclusively in government bonds while private companies can invest in a wide variety of securities to improve profitability.
  • The USPS is forbidden by law to lower prices to get more business.

There is much criticism of the Postal Service for losing money. However, without unreasonably burdensome restrictions, it would likely be a different story. Not only do many of these restrictions not make sense, they directly undermine the success of the USPS. Many would have us do away with the Postal Service altogether. Yet, they provide a tremendously valuable service to our country across a huge geographic expanse and at very low rates. Services in Europe that are comparable to our
first class
delivery, cost at least two to three times more than in the U.S. Many projections around elimination or privatization (full or partial) of the Postal Service paint a picture or greatly increased prices and decreased service levels and quality.

So, what’s the answer? How about if we consider a simple solution? What if we just got out of the way (by relieving the USPS of unnecessary burdens) and let them run their business as a business?

My Apple Is Not Your Apple – 5 Considerations When Comparing Mail Machines

By Paul Johnson, President Complete Mailing Solutions

We often come across companies who obtained new postage meter machines that they thought fit their needs only to find out they did not perform as expected or there were costs were higher than expected.

Decisions are often made based on the monthly rental or lease fee alone. However, you need to understand the total cost of operating a mail machine. There are 5 key areas to consider when comparing mailing machines:

Magnifying Glass with $ sign small
1. Equipment
2. Pricing / Fees
3. Postage – Funding / Managing
4. Customer Service – Training / Problem Solving
5. Supplies

Let’s take a look at each area.

    1. Equipment

The primary decision you’ll make is which mail machine best meets your needs. Consider:

      • Mail Volume

Consider daily/weekly/monthly/seasonal mail volumes. Your mail machine should easily handle your highest volume needs – don’t expect a low volume mail machine to handle heavy volumes.

        • Manual vs. automated feeding – The more automation during feeding, the faster mail can be sealed and imprinted with postage. Automation can reduce processing time up to 36%.
      • Types/Handling of Mail Piecesmail machine
        Consider the types of mail pieces you use – standard, oversized, flats, thick?

        • If you mail large pieces, be sure to get a wide deck so mail transports smoothly.
        • If you have a variety of mail pieces, look at differential weighing. Depending upon the type of differential weighing you can reduce the time to affix postage by 100%.
      • Accounting
      • Determine whether you will need to chargeback postage to internal departments or clients.
    1. Pricing / Fees

You’ll be living with your mail machine for many years so know what your costs will be.

      • Lease/Rental Fee
        Beware of low monthly rates. Vendors often increase the price up to 25% each subsequent year. CMS’s leases remain unchanged through the life of the lease.
      • Postage Feeshand held calculator
        Charges to reset (add) postage onto your machine (initially and over the life of the lease) can add up.
      • Maintenance
        Our most satisfied customers have a Preventive Maintenance program as part of their lease to ensure limited/no down-time.

If you opt out of a maintenance program, understand service charges (this can be a flat or hourly rate and include a trip charge and mileage fee).

    1. Postage – Funding, Managing
      • Funding
        Funding your postage account is generally available via:

        • Check – can take up to 10 days for postage funds to be available
        • ACH Debit Transfer – allow up to 48 hours for postage funds to be available
        • Line of Credit – postage funds are available immediately

        Costs vary for each of these options. Call CMS for more information.

      • Managing
        Online tools provide account visibility, invoice payment options and reporting. This is an invaluable time-saver.
    2. Customer Service – Training, Problem Solving

Support after the installation of your postage meter machine is critical.

      • Training
        Who (if anyone) will install and provide training on your new postage meter machine?
      • Questions and Problems
        • Is there a local resource providing help with problems or must you call a national (or international) Help Desk?
        • Will service be handled locally or remotely?

Complete Mailing Solutions (CMS) is a local resource providing training and personal help every time you call. We answer all your questions and resolve problems to save you time and frustration.

    1. Supplies

Supplies costs are generally not considered. Vendors often offer low monthly equipment rental/lease fees but have high supply costs.

You should compare:supplies

      • OEM (Original Equipment Manufacturer) vs. recycled cartridges
      • Low vs. high capacity cartridges (number of impressions for each)
      • Average shipping costs

There can be up to a 29% difference in the price of ink alone, depending upon the manufacturer.

CMS offers OEM supplies exclusively to ensure highest performance on your mail machine. We ship locally, which keeps costs low.

These are just a few areas to consider. Comparing apples and apples when considering different mail machines/manufacturers can uncover hidden costs. Use our comparison list to help: Mail Machine Comparison Checklist.

Need help finding the best mail machine solution for your business? Avoid the frustration of committing to equipment that is not want you want or need. Call us today – 303-761-0681.

6 Tips on Avoiding Being Scammed By Mail Machine Supplies Pirates

By Paul Johnson, President Complete Mailing Solutions

Everyone loves to reduce business expenses but often what seems to be a good deal turns out to be a nightmare. We get customer calls regularly that they have received supplies that don’t work in equipment and arrived with a high-priced invoice and an 800 # with voicemail. Scammers are everywhere and mail machine supplies are no exception.

Here are 6 tips to avoid being scammed by companies that are offering seemingly significant savings on postage machine supplies. A reputable company will not have any problem meeting these minimum standards.

  1. Verify the quality of the product you’re paying for. We’ve been contacted by customers who were offered “new”, less expensive ink cartridges only to find out they were either a refilled cartridge or a non-OEM (Original Equipment Manufacturer) cartridge. Refilled and non-OEM cartridges typically do not perform as well, can cause damage through leaking ink and could void your warranty and maintenance agreement. The most common complaint we get is that they impression looks “pink” and may not be accepted by the USPS. They typically have shorter life expectancy. Using OEM ink cartridges saves money in the long run by eliminating damage to your mail machine.
  1. Verify complete company/contact information. The salesperson should be willing to provide their name, company name, address, phone, web address before you make any commitment. Get a phone # and tell the caller you will call them right back. Most scammers will be reluctant for you to do this and will tell you they will call you back in a few minutes. This is a red flag!
    Other things to look for:

    • Only a PO Box is provided rather than a street address
    • You cannot validate their website
    • Bad reviews on sites such as Yelp
    • The company is not a current/approved vendor

    All of these should be areas of concern.

  1. Ask questions. It is vital to understand how sales are handled and what will happen if you are not satisfied or there is a problem:
    • Who do you contact if there is a problem?
    • What is the return policy and how can merchandise be returned if there is an issue (e.g., damaged or incorrect products)? There should be a minimum of 30 days to return your supplies. Typically, shipping expenses are the responsibility of the purchaser. Beware if you are provided with a PO Box to return your supplies.
    • How long are supplies warrantied? You should expect 30 to 60 days.
    • Will returns be reimbursed in cash, credit or replacement product only? Be careful of being trapped into a “product only” reimbursement policy. If the performance or quality is poor, having it replaced and dealing with on-going issues is just throwing money down the drain.

    Know what you are getting into, before you have no recourse!

  1. Contact known, trusted resources. Contact your original mail machine manufacturer or local authorized dealer to see if they are aware of the company contacting you. Quite often they are aware of the scams that are being perpetrated and can provide helpful information that will keep you out of trouble. This one step can make all the difference in saving you significant time and money that you thought you would be saving.
  1. Don’t disclose too much information upfront. Disclosing what make/model of equipment you have may have unforeseen consequences. Sometimes providing this information can be enough to generate an order you didn’t intend. We’ve seen supplies show up referencing a name as a verbal purchase order for supplies, even though the person said “no thanks”. Do your due diligence before you supply this information.
  1. Question the need to “buy now”. Disreputable companies will attempt to pressure you into making a purchase immediately. Blindly making a pressured purchase will often result on greater expense down the road when you find out the product wasn’t as advertised or is of inferior quality.

Being on the alert for potential scams and being armed with the right questions and information will save you both time and money in the long run.