An article on the Entrepreneur Magazine web site explains how one e-Bay seller is dealing with the USPS rate increase. Unfortunately, she gets the rationale for the increase wrong. “the main [reason] the extra revenue is needed [is] to fulfill a federal law that requires the USPS to place $1.3 billion in an escrow account to cover civil service retirement benefits. ”

Actually, the escrow payment is the only reason for the increase. And the amount is $3.1 billion, not 1.3. And it isn’t to “cover civil service retirement benefits”- the only real reason for the escrow account at the moment is to provide a few extra bucks to offset the Bush budget defecit.

But there are a couple of interesting comments made by the author:

• “One very smart way for a seller to turn insurance from a high expense into a profit center is to consider using private package insurance. I’ve used the services of a company called U-Pic.com for several years and have saved considerably on my insurance. My customers get optional insurance and pay the standard USPS rates. I pay U-Pic their standard rate, which is a 60-percent savings to me over the USPS rates. I actually profit while insuring my packages!”
• “Another thing to consider when using Priority Mail is the availability of free boxes–delivered direct to your door by the post office. This doesn’t seem like much, but you can save up to 65 cents per box when you buy in bulk.”
• “My first knee-jerk reaction was thinking I would switch all my shipping over to UPS or FedEx Ground, but then found out that they’ve had rate increases as well.”

That last comment does make me wonder how much of an eBay expert the author is, if she doesn’t realize that UPS and FedEx raise their prices every year, but maybe it’s just that she’s always used the PO?

Ouch! The Postal Rates Went Up!