The price of a first-class US stamp is set to increase from 46 to 49 cents on January 26. Like Cosmo Kramer’s Michigan bottle redemption plan (see below), Allison Schrager and Ritchie King ran the numbers on whether it would be possible to provide from Forever Stamp arbitrage.
Could the scheme make money? Maybe–if you get the timing right and pay low interest on capital:
Assuming we sell all 10 million stamps for the bulk discount price of $0.475 each, our profit will be $150,000. Subtract out the $399 for the distributor database. Let’s also assume we spent the $3,500 for Check Stand Program plus, say, $300 to make the 100 displays for advertising in stores. That gives us $145,801.
If we do manage to shift the stamps in a month, the interest on our debt will be $29,000. That brings our profits to $116,801. Then we’ll return the equity to our shareholders, along with 50% of the profits.
That leaves us with the other 50%: $58,400.50. If you look at that as a profit on the $4.6 million initial outlay, it’s not very much: less than 1.3%. But remember, all that outlay was leveraged. So if you look at it as a return on our investment—$33.25 for shipping—it’s 175,541%.