A number of diverse factors come into play when determining the grade of a stamp, and any system that compresses these factors into a single numerical (or adjectival) grade is necessarily complex. However, such challenges are not unique to stamps.

The grading of sportscards attempts to balance such diverse attributes as edges, corners, surfaces, centering and registration quality, all of which must be weighed to arrive at a single, numerical grade. Similarly, rare coins have attributes such as strike, surface preservation (marks, scratches), luster, and toning (eye appeal), all of which must be considered when determining a final grade. Difficult? Yes. Controversial? At times. Impossible? No.

The grade of a stamp has two principal components:

Soundness (the presence or absence of faults) and Centering the balance among the four margins)

This concept of combining soundness and centering is the heart of the PSE grading system. For faultless stamps, the final grade is, in most cases, the same as the centering grade. For stamps with a faults, the PSE Grading System is an attempt to model the value that the real world places on stamps which have some faults.

PSE is of the opinion that a very large majority of pre-1890 U.S. stamps and a majority of 1890-1920 stamps have a fault of some sort. To basically shrug off that portion of the market with statements like "faults decrease the value of a stamp" and "let the market determine how faulty stamps should be valued" leaves all but fully knowledgeable collectors at a severe disadvantage.

PSE's system, which can be revised as market research deems prudent, is an attempt to level the playing field for all of us, and entice new participants into the fascinating world of stamp collecting.

A third component, Eye Appeal (color, impression, cancellation) allows room for some adjustment after the basic grade is determined.

Finally, for mint (unused) stamps, a notation is made of the gum condition. That notation follows the grade of the stamp, and is not a factor in determining the basic grade. It does however, play a major role in determining the fair market value of a stamp.