VALUE ADDED? OR JUST ROBBING THE COOKIE JAR?

The following is a perspective by postal commentator Gene Del Polito for Direct magazine.

Not long ago, the U.S. Postal Service created quite a fury within the business mailing community by proposing to charge a premium for those mailers who wanted to use the postal equivalent of Post-It Notes (repositionable notes) on mail pieces. The argument was that this was a "value-added" service the Postal Service was offering that warranted a higher fee despite the fact that this has long been a practice mailers have used without imposing any  additional cost burden on the USPS. Recently, I heard a commentary on CNET's Buzz Outloud concerning an argument between the telephone companies and Google and Yahoo over a similar value-added logic. I'd like to use that analogy here.

Assume for a moment that the Postal Service is a gas company. Assume also that mailers using repositionable notes are cookie bakers. The gas companies provide the gas that the cookie bakers use to bake the cookies. Of course, the cookie bakers pay for all the gas they use in accordance with the rate schedule the gas company itself had promulgated.

Lo and behold, the cookie bakers have turned out a delicious product that is in high demand by consumers. Sharp businesses that they are, they're making a bundle off cookie sales.

The gas company gets a little jealous of their success. To their way of thinking, the gas they've been supplying has added a special value to the cookies the bakers have been making. Consequently, they conclude that it is only right and just for them to want a greater piece of the cookie making action, and decide to charge the bakers a per-cookie add-on.

The cookie companies go nuts. To them, they've already paid for the gas they use, so why should they pay the gas company any more? Indeed, the cookie companies have a point. The cookie companies are assuming all of the risk associated with their product, but the gas company wants a part of the take. Instead of weasling in areas where it doesn't belong, the cookie companies want the gas company to concentrate on more efficient methods for generating and distributing gas.

On the other hand (and in such instances, there's always another hand), if the gas company is willing to share some of the risk the cookie companies face in the marketplace, they might be willing to share some of the profits that come from the sales on cookies baked with gas.

Get the message? The USPS should give up the idea of "value-added" pricing if it means simply sticking hands in mailers' pockets to share profits without exposing themselves (as a real partner would always do) in sharing risks.