Postcomm Favors Considering Size in Royal Mail Pricing

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Postcomm is inclined to accept recently announced revised proposals from Royal Mail to price letters and packages by their size and weight beginning April 2006, the United Kingdom postal regulator said April 5.


However, Postcomm is consulting interested parties before deciding, both on the proposals and the notice period before their introduction.


Letters and packages are now priced solely by weight, but Royal Mail said it costs more to sort, handle and deliver large envelopes and packages. This means light but bulky items are priced below cost, whereas heavy items are generally overpriced. Royal Mail wants to change its prices to reflect its costs more accurately.


The changes would let Royal Mail charge more for light but large mail such as very large greetings cards, rolls of photographic film and videotapes. But some heavier items -- catalogs and books, for example -- would cost less. Any price increases would need to be balanced by reductions elsewhere to make the price restructuring revenue-neutral.


"With full competition in postal services starting next January, it is essential for all parties that Royal Mail's prices align with its costs," said Nigel Stapleton, Postcomm chairman. "Some of its current prices are a carryover from its days as a national monopoly when cost-reflective pricing was less important. To allow this to continue would unbalance a fully competitive market."


A notice period of 12 months from now would balance the need to give users time to adapt while providing certainty for the market, he said.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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