Business Newsletters - Winter 2005

Post Charges Set To Change

Royal Mail’s 2004/05 accounts showed that the company made a loss of £235m on stamped mail - a loss of 5p on every item of first class stamped mail and 8p on every item of second class stamped mail. In the light of these statistics, it’s no surprise that post charges are set to change in 2006.

The Royal Mail has announced that the way in which it charges for post will change from August 2006. Currently post is charged on a weight basis. However from August next year, size as well as weight will determine cost. Accordingly, post will be classified as either a letter, large letter or packet.

The new scheme, known as ‘Pricing in Proportion’, has primarily been designed to enable Royal Mail to more accurately reflect the cost of handling post in its prices.

The changes are expected to affect prices on around 20% of stamped mail for consumers and 30% of business mail. For those affected some costs will be reduced however, for others, the changes will mean increased costs unless action can be taken.

The table below gives an indication of the new dimensions and prices, although prices will be subject to change next year. The new dimensions can be best viewed via the Royal Mail website.

Format	Size	Weight	Pricing in Proportion		Existing Price Range
			*FirstClass	Second Class	*FirstClass	Second Class
Letters	Maximum 240 x 165mm 5mm thick	0 - 100g	30p	21p	30p - 46p	21p – 35p
Large Letters	Maximum 353 x 250mm 25mm thick	0 - 100g	42p	35p	30p - £2.71	21p - £2.12
		101g - 250g	61p	53p
		251g - 500g	85p	72p
		501g - 750g	£1.23	£1.05
Packets	Minimum 353mm long 250mm wide 25mm thick	0 - 100g	94p	80p	30p - £3.64	21p - £2.12
		101g - 250g	£1.19	£1.04
		251g - 500g	£1.59	£1.32
		501g - 750g	£2.06	£1.66
		751g - 1kg	£2.53	£1.99
* Discounts for all franking and account customers on their first class mail will continue to apply.

Good news or bad?

It’s not all bad news! For example, more generous weight allowances will be introduced. The maximum weight for letters will be increased from 60g to 100g and the maximum weight of second class mail will increase from 750g to 1kg. It may also be possible to make some simple changes that will avoid the increased costs, for example, folding A4 letters in half, so that they fit in a standard C5 envelope.

According to Royal Mail, franking machines will be able to cope with the changes, although some weigh scales may need to be replaced.

Further details about the changes can be found on the Royal Mail website and using the quickfinder to locate the ‘Pricing in Proportion’ link.

Finally, if you are unhappy with the changes, remember that the UK postal market is opened to full competition on 1 January 2006. It will be interesting to see the alternatives that become available.

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