Brace yourself for another technology upgrade. No, we don't mean Windows 98. We're talking about postage meters, and unless you go back to using stamps, you're stuck. By law, postage-meter companies have to retire the old mechanical meters and replace them with tamperproof electronic machines. At last count, this meant that about 776,000 meters must be changed by Mar. 31, 1999.

Chalk it up to a security-conscious government. Since postage meters are much like a local version of the U.S. mint--issuing stamps instead of dollars (the government wants to minimize opportunities for fraud. It's much harder to tamper with postage that comes on a microchip) or at least, that's the government's theory. So mechanical meters will go the way of manual typewriters.

The same concern about security means that you're required by law to rent your postage meter, not own it. This gives the government the power to take the machine back if you misuse it. Only five companies in this heavily regulated business are allowed to rent them out. Of course, as you move to the new machines, your own business' security may improve, too. ''Stamps have a tendency to walk off when you have employees,'' says Marilyn R. Taber, owner of Rhodes & Taber Ltd., a greeting-card startup in Petaluma, Calif.

The new machines do have some advantages. Most postage meters can be refilled through a phone hookup with the vendor, eliminating the need to dash to the post office when you run out of stamps or don't have the right combination for a bulky package. And if you can't stand the taste of envelope glue, an optional moistener starting at around $5 a month will lick the problem--by sealing envelopes automatically.

Some new electronic meters offer features unavailable on most mechanical meters, such as automatic calendar tracking. It's no small matter, since the postal service rejects mail that is stamped with an old date. Another handy option: an interface with a scale, allowing you to weigh your letter or package and automatically calculate the right postage.

Just because the law requires you to rent the machine doesn't mean everything else has to be rented, too. Other components of a mailing system can be bought outright, such as the scale and the base, which feeds and collects mail as it moves through the meter. That saves you money in the long run if you shop hard enough. Just don't expect any encouragement from your dealer. Some of them erroneously state that the government requires you to rent everything. Others will sell you equipment, but jack up prices on maintenance so that leasing turns out to be much cheaper.

While it's not exactly a buyer's market, you do have some choices. We found seven small-business postage meters that can process up to 500 pieces of mail a month, and then identified the best models for three typical situations.

NO FRILLS. The first scenario is the office that wants a postage mark but processes fewer than 10 letters a day. Here, you're looking for a no-frills meter that will deliver a postmark inexpensively. The Personal Post Office from Pitney Bowes Inc. stands out. With a first-year rental rate of $19.75 per month and a built-in date changer, this is the least costly model of the bunch, saving you about $150 a year compared with other options. What's more, the rate includes four telephone-based meter refills a year, a $35 value. This stand-alone meter has no base to feed the mail automatically--you do that by hand. While there is an optional scale available for $5 a month, we would pass on that. Buy a scale from an office supply store instead for about $70.

Among the drawbacks to the Personal Post Office are its high operating costs, particularly for ink. The average cost of printing indicia, or postmarks, is about 6 cents on top of the cost of the postage--almost twice the postmark cost for Pitney Bowes's other small-office product, PostPerfect. As a result, you may want to think twice about using those nice-looking but ink-loving messages that the meter includes for printing alongside the indicia.

The equation works out differently in our second scenario, an office that sends more than 10 letters a day. We'll assume at this higher volume that there will be more packages of varying weights and sizes, with some being too bulky to be fed through the meter. The Ascom Smart Series meter takes the honors here. The $29 monthly lease costs more up front, but it comes out cheaper when you take into account the cost of ink and labels. This meter also lets you track how the postage is being spent, with up to 25 chargeback accounts available, and it includes a catch tray that keeps metered mail in a neat stack.

The optional scale can be hooked up to the meter, but keep in mind that such automatic scales need to be updated whenever postal rates change, and the service call can easily take $60 out of your pocket. With the proposed increase looming for the cost of a first-class mailing, you may want to negotiate the costs of any updates beforehand.

The Ascom meter also requires you to be diligent about ordering refills. Remember to mail in your check about a week before your meter runs out of money, or you'll have to shell out a $30 fee for an emergency advance.

If you're no good at those kind of details, take a look at the Francotyp-Postalia or Neopost offerings instead. These vendors offer a direct-debit system that will transfer funds directly from your bank account on your say-so, at no extra charge. (Pitney Bowes offers a credit program that costs nothing extra if you pay everything off on time--a nice touch if your cash flow is tight.)

NO HANDS NEEDED. Our third scenario covers a company that sends a lot of packages that can't be run through a meter. If that's you, pay special attention to the Neopost SM22, which comes with an optional label dispenser. A stack of 50 labels can be popped into the well, a feature that eliminates the need to guide each one manually through the meter.

Keep in mind that these recommendations are made on the basis of first-year pricing only. Vendors often ratchet up prices after the first year, though--so be sure to read the fine print before signing your name to a multiyear contract. In the case of Pitney Bowes and Neopost, pricing after the first year will vary according to how much postage is used.

All of these options may become obsolete later this year, when E-Stamp unveils its stamping solution. This company, only the fifth to be approved for handling meter systems in the U.S., has developed a device you can buy instead of lease that allows your printer to apply government-approved postage. It's expected to cost less than $199; the actual postage and refill fees are extra. The devices could appear in the fourth quarter of this year, perhaps in time for holiday mailing. If you're looking for something to get your favorite gadget-crazy geek, this one just might earn a stamp of approval.

By Mie-Yun Lee, editorial director of BuyersZone (www.buyerszone.com) in Boston.

This article was originally published in the June 22 print edition of Business Week's Enterprise.

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