Postcomm OKs Royal Mail Plan to Price By Size

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Postcomm, the independent regulator for postal services in Britain, gave Royal Mail the all-clear to charge postage according to the size of a letter or package as well as its weight.


The regulator said the new price structure is being referred to as Royal Mail's Pricing in Proportion price structure and will be the greatest change in postal pricing since the introduction of the Penny Black stamp, the world's first adhesive postage stamp issued in 1840.


"Pricing in Proportion" will apply to most of Royal Mail's inland services, including first and second-class post. However, because the vast majority of mail is flat and weighs less than 60 grams, most people will find the price of mailing a letter to be the same, according to Postcomm.


Postcomm's 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.


"This is a major change to the way people pay for their post," Nigel Stapleton, chairman of Postcomm, said in a statement. "It will promote the development of a successful and growing postal market by allowing Royal Mail to bring its prices much more closely into line with its costs. This is particularly important given the full liberalization of the postal market in January."


The announcement follows two years of extensive consultation by Postcomm and reflects substantially revised proposals from Royal Mail.


Postcomm proposed allowing Royal Mail to introduce the new charges beginning next April, but after analysis of responses this has been put back to August next year to allow postal users 12 months to prepare.


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 wanted to change its prices to reflect its costs more accurately.


Postcomm agreed to the program on the basis that Royal Mail will not make any extra revenue from the revised pricing structure. Royal Mail will also launch a substantial publicity campaign to explain the changes.


Postwatch, an independent consumer body in the UK set up to ensure a quality postal service, along with Postcomm will closely monitor the implementation to safeguard the interest of customers.


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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