The U.S. Postal Service’s pricing structure and price levels illustrate government pricing policy to serve the public interest. The postal pricing structure has aspects plausibly related to service cost. An obvious example: mailing prices increase with the weight of letters and parcels. Moreover, mail prices are lower if (bulk) mail is put into the mail network closer to its ultimate destination. Mail that cannot be machine-processed has a higher price. Mail with a higher priority of delivery also has a higher price. These are price distinctions directly related to service cost.
The postal pricing structure also has public policy aspects. Evidently to encourage the growth of nonprofit organizations, nonprofits get lower mailing prices. For standard mail, nonprofit organizations receive mailing discounts that vary based on the weight of the letter, its entry point into the mail network, the carrier route, and automation. These discounts appear to have been set as fixed-value discounts rather than percentage discounts. Whether nonprofit discounts should be calculated as an absolute value or a percentage isn’t obvious from the perspective of public policy. Neither is the variation of those discounts across particular technical aspects of mail service. Notwithstanding their tenuous relation to public policy objectives, these detailed pricing issues are a significant aspect of the nonprofit-discount pricing policy.
Content distinctions are another public policy aspect of postal prices. Mailed materials classed as periodicals receive discounted postal prices. That price discount might be justified as serving the public policy goal of fostering public information and public consideration of matters of public importance. The regulations defining periodicals include:
- The publication must be published in a serial format (such as volume 1, issue 1; volume 1 issue 2; volume 1 issue 3).
- The publication must be published at least 4 times a year with a specified frequency.
- The publisher must have a known office of publication. This office should be accessible to the public during business hours for conducting publication business.
- The publication must be composed of printed sheets.
The periodical mailing price depends on whether the printed sheets contain advertising or editorial. Compared to regular advertising, editorial has a discount price per pound mailed. The editorial discount ranges from 16% to 72% depending on where the printed matter is put into the mail network. Giving an additional discount for periodical editorial compared to periodical advertising is consistent with a public-information justification for discounted periodical mailing prices. However, the periodical pricing structure includes an extra discount (beyond that for editorial content) for advertising concerning the science of agriculture. The mail discount for material containing science-of-agriculture advertising probably reflects lobbying by businesses with interests in agricultural advertising.
Another special mail pricing structure is for bound printed matter. Postal service regulations defined bound printed matters as printed sheets “permanently bound by secure fastenings, such as staples, spiral binding, glue, or stitching.” The public-policy significance of binding printed matter isn’t obvious. Detailed knowledge of postal interests and postal politics seems key to understanding these postal prices.
Postal content-based pricing also exists for educational media. To receive special “Media Mail” prices, material mailed must meet these postal regulations:
The material sent must be educational media. It can’t contain advertising, video games, computer drives, or digital drives of any kind. Media Mail can be examined by postal staff to determine if the right price has been paid. If the package is wrapped in a way that makes it impossible to examine, it will be charged the First-Class™ rate.
Some might regard certain video games as educational media. Computer drives could contain traditional educational media, such a digital forms of school textbooks. Examining the contents of mailed digital drives probably isn’t infeasible for the postal service. Hence educational media placed on digital drives doesn’t receive the Postal Service’s Media Mail prices that other educational media receive.
Libraries receive special postal prices. Compared to educational media receiving discounted “Media Mail” prices, similar mailed content sent by libraries receives about an additional 5% discount. For mail weights from 1 to 70 pounds, the discount is nearly uniform. But it isn’t exactly uniform. The discount is slightly higher for the first pound and it’s lowest by a small amount for the seventh pound. The interests and calculations that produced these specific discounts aren’t clear.
Setting prices for important public services can be a useful public-policy tool. Detailed, technical aspects of pricing policy favor narrow private interests. Getting government-set prices that are meaningful in broad public discussion and relevant to broad public interests is a major challenge.
* * * * *
Data: postal service price comparisons by mailer characteristics and mailed-content type (Excel version)
Read more: