Thursday, May 31, 2007

eBay versus Postal Increase Follow-up: Six Ways to Save on Postage

In a previous article a couple weeks ago about how the new postage rates, which just went into effect, can affect the revenues of eBay (EBAY), I talked about how some eBayers were holding off on doing listings until they got a handle on the new postage rates, the aspects of packaging on rates, and the new costs and levels for postal insurance.

I just mailed a package today with $100 in insurance, but discovered that the package won't be signed for. In the past, anything over $50 sent insured always had to be signed for; the postal carrier would never leave it in the mailbox or on the doorstep. Now you don't get the 'free' sign-for service unless the package is worth over $200 [you can always pay extra for signature confirmation].

So for those eBayers who sell items in the $50 to $200 range that are used to sending their items insured in order to have the package signed for, plan on major changes. This includes those who sell coins, stamps, autographs, Pez dispensers, beanie babies, or any other collectible at an average price of, say, $150, here is what you would have to get from your customer in order to cover all your first-class postage and insurance costs, with the signature confirmation: $1.81 for the postage, $2.45 for insurance, and $2.10 for signature confirmation, for a total of $6.36.

So how can anyone, not just eBayers but any small business or individual that does a lot of mailing [but not by bulk rate, as that is a whole other ball game], cope with the higher postage rates? Fortunately, there are several things you can do to keep your postage down.

1. Two Ounces - First of all, if you are used to sending out two ounce envelopes, don't worry. You should actually be celebrating because the cost to send a two ounce envelope has actually dropped. Here's how it works. You used to pay 39 cents for the first ounce and 24 cents for each additional ounce for a total of 63 cents. Now you would only pay 41 cents for the first ounce and just 17 cents for each additional ounce for a total of only 58 cents, a savings of about 8%. This assumes, of course [although maybe I shouldn't say 'of course'], that you don't use a square envelope, an envelope containing a rigid object or an odd shaped envelope.

What is even more incredible is that the more ounces you send, the greater the savings. For three ounces, the savings over the old rates would be 13.8%. So if you do a lot of mailouts and you've held off on going over an ounce in order to save money, now is the time to go over. However, three and a half ounces is it; the post office figures that you can't fit four ounces in a regular size envelope, so then you would have to pay larger envelope rates.

2. Forever Stamps - Buy Forever stamps and put them away, for yourself, for your children and grandchildren. If you haven't heard of the Forever Stamps, they cost 41 cents, same as any other first class postage stamps being sold now, yet they will be good for the first ounce of first class postage forever! So if the Post Office doesn't go back on their guarantee, you can keep using them for the rest of your life, even if postage goes up to $5.00 per ounce. Since 1970, postage has gone from 6 cents per ounce to 41 cents, an average annual increase of 5.33%. So you can almost think of these as being similar to a U.S. savings bond, 'guaranteed' by the USPS never to go down in value.

3. Know the Rules - Stay away from the weird size envelopes, envelopes with clasps [yes, apparently there is a surcharge for that], and all the other weird rules and restrictions. Remember, you can send a two ounce envelope for 63 cents, as long as the envelope is standard and the thickness doesn't exceed 1/4 inch. If it does, you pay a surcharge.

4. Business Reply Envelopes - You would think that this would go without saying, but take advantage of business reply envelopes. Here's what I personally discovered. I've had a mortgage at a small bank and I've been sending in the reply envelope that comes with the bill, and on which I need to affix my own postage on. I happen to be in the bank recently and asked about envelopes, and they handed me a big stack of business reply envelopes. Obviously this won't save me a lot of money in dollars and sense, but if I can get Business reply envelopes from other banks and companies that I make payments to, it will start to add up.

5. Bulk Mail - If you are a small business that is doing a large amount of mailing, check into getting a bulk mail permit.

6. Buying Stamps at a Discount [the Big Secret] - Yes, it is possible to buy unused postage stamps at a discount from face value. Many stamp shops and many sellers on eBay sell older stamps that have never been used, sometimes way below what the retail price of the stamps are. Don't believe it? Go to eBay, type in 'Postage' or 'Postage below face' or 'Stamps below face' in the Search box, and look at what comes up. I just checked and found $225 worth of unused stamps offered at a current bid of $88 and dozens of other offers.

Why is this happening? A lot of times, stamp dealers will buy stamps from estates of stamp collectors and pay a major discount to the face value of the stamps, sometimes 50% of face value. They can then afford to resell them still at a 10%, 20% or 30% discount to those who want to use the postage. Sometimes small businesses have stocked up on rolls of stamps, and when rates go up, its easier for them to just sell the rolls at a discount and buy new rolls, instead of using the stamps with additional two cent stamps to add up to the current rate.

When looking at eBay listings, the two key terms you should be aware of are 'Below Face' and MNH, which stands for Mint Never-Hinged or Mint No Hinge. This means that the stamp has never been used, never cancelled and in mint condition. The hinge part refers to little hinges that collectors use to attach stamps to pages of albums. You lick them just like a stamp, so you obviously don't want any that have been hinged.

There is one other type of stamp that you may see offered, and those are the 'no gum' stamps. If the seller got these off of envelopes and packages he received in the mail that weren't cancelled, they are illegal to sell. If they are from flood damaged stamps or soaked off SASE stamps from envelopes that were never used, they are legal, however, it is a real hassle to try to glue these on envelopes whenever you want to send a letter.

Author owns EBAY.

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