Pricing Innovation for a Transitioning Postal Administration

Abstract

This paper argues for the importance of pricing innovation in postal administrations that are transitioning gradually from highly regulated monopolies to less regulated, competitive entities. We argue that the incumbent operator ought to seek pricing innovation and flexibility under current regulatory constraints, with the anticipation that these strategies will better position the entity for competition in the future, if and when constraints are lifted. This paper offers a conceptual framework for pricing innovation based on established principles of market segmentation and value-based pricing. We illustrate the framework in the context of a Negotiated Service Agreement (NSA) that United States Postal Service (USPS) recently concluded with Capital One. The case study offers an opportunity to highlight the strategies, organizational changes, and resources needed for successful implementation of value-based pricing.