Dude, raise your price! The difference between $1 and $2 is immaterial to the buyer (heck, it costs me $1 in lost wages just in the time it takes to fill out the order form). Yet raising the price on your end will result in 1500% increase in bottom line profits. That's a no-brainer. You may even want to go as high as $4.

What about your time? Is that the 6c, or does paypal somehow automate this?

It's really a shame that paypal makes more than you do. Are there any payment gateways that are better for low-price transactions than paypal?

I don't think it's all about costs. One great benefit of PayPal is that it's a known and (somewhat?) trustworthy brand. (Yes, I know, it's far from perfect...)

Time spent posting the letter? Or is that wrapped in..

What type of envelope and paper cost that much?

I think if someone is paying to have a letter sent, it should be made of high quality paper and be sent with a high quality envelope.

I would check that assumption. Most letters I have sent were required because some service was living in the stone age, or making my life difficult.

For example, to cancel my gym membership, I had to mail a notorized document to their corporate office. The entire purpose was to discourage and inconvenience me. I'm sure they toy with the idea of making cancellations in-person only, at an office on the peak of Everest. I'd just assume that letter arrive flaming as printed on high quality paper.

just assume -> just as soon

Interesting slip on my part. I wonder if there's a word for that?

40c for envelope and paper sounds very expensive, surely you could find cheaper envelopes? And paper is what, 2-3c?

(I am from Old Europe so I might be off about prices in the USA)

How fast can you fold, stuff and seal an envelope?

That black ink may get you into red.

http://www.printpsi.com/automated_mailing_system_maverick_in...

Here's your business model if you want to get serious:

1 - You setup a few offices in key metropolitan areas. (NY, LA, etc.)

2 - Each office has an automated setup to print envelopes and letters and stamp them. (I'm sure USPO has a system for this so you wouldn't need to literally stick things on an envelope.)

3 - Web-app/api is centrally hosted and linked to the distribution nodes. Based on destination, you assign the letters to the nearest distribution node.

4 - You undercharge FedEx/UPS/etc 2 day. (That's your ceiling). If you mail in NYC to another NYC address, they're gonna get it the next day.

You have fixed up front costs (the machines) and recurring monthly costs (rent, electricity, paper, ink, etc.).

I would think an investment of around a few 10Ks could get you up and running in the initial key metros (NYC, SF, etc.) and then expand.