USPS Pricing

[gregorpalon0]

Anybody else wondering how your going to survive with the latest price increases? This is crazy! 2 ounces 3.36 local. Unbelievable. May have to change strategy. 

[d-k_treasures]

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@downunder-61 wrote:

Didn't you guy's just have a shipping price hike very recently ?? Surely this is not another one

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We get one at least once a year whether we need it or not.

[johnrj1226]

Simple reasons for the increases - a long history of  "red ink" read these links

https://www.google.com/search?client=firefox-b-1-d&q=usps++financial+losses+by+year

https://www.thoughtco.com/postal-service-losses-by-year-3321043

[byrd69er]

This is just as crazy.

Deliver it yourself.  

Save that whopping $3.36.

[jayjaspersgarage]

@jayjaspersgarage wrote:

No, I don't think about how I will survive per say.  I plan and scheme on how I will bring in more sales while covering costs.  After ten years of postage price increases you just roll with the inflation.  I was thinking about how in 2011 when I started I was charging $2.48 for up to four ounces with tracking and pocketing 17 cents on each mailing.  That was for 3000 miles.  Now it's $3.79 to break even.  

"Alas!  If you can't pass the increase costs on to your customers your business model is probably flawed.  Either that or the product that you're selling just isn't profitable so you need to find one that is or call it a day and close shop."

I think you may have missed my point that I was only writing about shipping and handling.  Of course the customer pays for the product PLUS shipping and handling.  We all need to pass the increase in COGS to the end customer or to the wholesaler if you ever sell on that level.  On the other hand you may have been making a generalized statement.

[justafemster]

I live in CA, gas is NOT over $5.  I just paid $3.93.  

[toooldtorock]

"Yes, Dejoy has certainly been doing his best to destroy the USPS. Ever wonder why?"

USPS has been heading down the price increase path for years. If not Dejoy, it

would be someone else.

USPS looks at FedEx and UPS rates and gets envious. Plus USPS is supposed to

turn a profit.

[jayjaspersgarage]

"Feel sorry for those  folks in California and the Northeast  statse - gas is over $5.00.

Sign of the times - get used to it.  Looking like 1971 thru 81 again."

It's all relative to each individuals situation.  Living in California for me is going just fine.  Sure, back in 1977 I paid 56¢ per gallon for gas but minimum wage was $1.25 an hour.  A modest four bedroom house was under $50K and the dollar store were called Five & Dimes.

Speaking of stagflation and 1981.  I bought my first home in 1982 right when interest rate peaked at 16%.  The recession was ending quickly and construction was booming in Silicon Valley.  My friends from high school were out driving their muscle cars and chasing girls while I started paying off my first home is an accelerated fifteen year payoff schedule.

Using 1982 as a cost basis for gas ($1.00 a gallon)  and the $4.39 I paid yesterday when I filled up versus the massive equity gains in my real estate portfolio since 1982 the last thing this Californian thinks about is the price of gas.  We have short sleeve weather until late December with a few cold snaps.  

IF you are in the right industry you can earn between 150K and 170K straight out of college.  

Anyhow, gas is a write off for two of my businesses.  I'll just pass the cost of gas onto my customers.  

[jayjaspersgarage]

"Didn't you guy's just have a shipping price hike very recently ?? Surely this is not another one"

Howdy AUS.  We get annual postage rate increases in January.  The newer twist is the October surprise which is a more recent phenomenon.  They have a holiday increase that is 'temporary' that gets rolled back right before the annual permanent increase.  lol  We have to wonder whether we are sheep following the blind bureaucrats.  

Seems to me the sellers who complain the most when the postal rates go postal try to stick with hiding the cost of shipping in their 'free' shipping and handling schemes while the more pragmatic sellers keep the postage and handling separate so the customer sees the actual cost.

[a_c_green]

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@postingid7659 wrote:

Nobody absorbs costs.  Pass them on.   Sales may suffer, but everyone is in the same boat. 

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Yes, that's the converse of "A rising tide lifts all boats," what you might say about a change that benefits everyone. This price increase does not, but I don't care all that much if the USPS bumps up their prices, as the same increase affects everyone else shipping the same way as well.

[m60driver]

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@inhawaii wrote:

2 oz. package went up 30 cents.

My strategy would be to raise my price by at least 30 cents. 

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You would need to raise your price by 60 cents to maintain, say, a gross profit margin of 50%.  But only increasing the price by the postal increase of  30 cents should only marginally lower your true gross profit margin.    Some of the other recent postal increases were nearly a dollar, which means on inexpensive items weighing over 12 oz.  raising one's sell price by as much as $2 to maintain margins, an increase which might make one unable to compete with other sellers.  This is one of the main reasons I am now passing on some of those inexpensive widgets I use to pick up at estate sales for a dollar.  I am not about to do the required bookkeeping for tax purposes on an item where my net profit before taxes is now under $5.  

[iart]

Yes. You can't simply increase your prices to compensate. If something is worth only so much, that is what it's worth. If other sellers have less costs, they can undercut your price.

With people earning pennies on sales, I don't think there's a lot of room for most to simply absorb the increased costs. And it will probably get worse. The US has spent trillions while the economy was slumping - that means inflation.

Sellers who have tight margins will probably do better seeking out other items to sell or getting a job in the fast food industry.

[johnrj1226]

@justafemster 

That is what CNN reported this morning.  Looked at AAA and they report prices  prices in Cali from $4.66 (regular) to $4.77(Premium).  Seems real close to $5.00 to me especially especially if one rounds up to the nears buck or CNN exaggerated a tad by 2 bits & a Yankee dime  or that station you went was in a price war with the station on the next corner.

BTW here is the AAA chart for for all states on fuel prices for today

https://gasprices.aaa.com/state-gas-price-averages/

[dbfolks166mt]

    It's more of a question of how to remain competitive when the increased shipping costs and the addition of sales tax have leveled the market with B&M stores and in some cases tilted it in their favor.   

     It is fairly easy to pass along the increased shipping cost to the buyers if you incorporate into your total cost (aka free shipping or flat rate shipping) The calculated of course the buyer see and has to factor into the total cost. But how do those prices stack up in the marketplace?  

     I am fortunate that I live in a large metropolitan area where about any store you can think of is within a couple of miles. I seldom buy anything on eBay these days simple because I can generally find it cheaper somewhere else, often in a B&M store where there are no concerns about shipping, damage, lost packages and I can see the item before I purchase it. Returns are also straight forward and simple. 

     If the government increases the tax rate on corporations that is simply going to flow down to the consumer. It will be interesting to see what eBay does with their fee structure should this actually come to pass. 

[johnrj1226]

No doubt increase shipping costs and the sales tax being applied to eBay sales did/does close the gap between on line sellers and B &M retailers had/has closed the price gap for eBay sellers.  But this year may have the pendulum swing the other way due to 5 factors in my judgement:

1. Convince - value  will vary for some  every body - but lot a people like it especially  at grocery stores

2.  Covid is still hang around - less than 40% of the people in our county of  110K have been full vaxxed.  Certainly larger crowds in the aisles makes for more in the hospital - I normally don't like to shop but hate it when it is crowed and we do minimize our risk of  catching the dreaded Covid - too many people did and still are taking the dirt nap.

3.  Retail stores  shelves and rack are all ready empty or just a few items are available  - our local Walmart, we have two in our county, the toy aisle has  limited offering - we went to their to buy a CAT bulldozer to play in his sand box for our just turned 3 Grandson - Wyatt.  We lucked out found one - the  last one on the shelf.

4.  Seems  like their are  lots of mega container ships from China and other SE Asia countries are anchored on both coasts with no clear end in sight.

5.  Gasoline prices  are increasing and where  it will stop is up to OPEC.  IMHO people will be less likely to driver around to find another CAT bulldozer for a  dark Brown hair blued boy with the greatest smile in the world and luvs T-Rex & his PaPa too.  We are retired like 30 million other and we will shop on line  and/or do the  safe thing - buy gift cards but not on line for Christmas - except for our Grand & Great Grand (both 3) - the rest of our crew  are in their mid 30s & up - cards for each.

[oldwestgold]

I worked for the USPS for over 33 yrs.  Probably 20 years ago the old saying was that for every 1c fuel goes up it adds over $1 million dollars a year in USPS expenses. One thing you can always be sure of, whenever the USPS raises their prices, FedEx and UPS raise theirs' multiple times more. Here's also a fun fact. The USPS handles more mail volume in one day than FedEx and UPS combined handle in 1 year. Chew on those facts if you believe either UPS or FedEx could ever take over the USPS volume.