Pricing in Proportion: An Introduction
On 21st August 2006 the Royal Mail introduced a new system for calculating postal costs. Unlike the previous purely weight-based system, charges now take into account the size of the item. Items are classified as one of three formats: letter, large letter, or packet. The format is determined by the size and thickness of the article. Each format has its own table of weight-band charges. Postal charges are thus a combination of size and weight.
Background
The purpose of the change is to reflect more accurately the costs to the Royal Mail of delivering all items of mail. The size of a mailing item is a more important factor than its weight in determining its delivery cost. Large, light-weight, bulky items incur greater sorting, handling and transport costs. The previous system that charged on the basis of weight alone meant under-charging for large light-weight items and over-charging on smaller heavier ones.
The change is expected to affect only 30% of mailing items and does not change the cost of posting a standard first or second class letter. Of those items affected roughly half will actually cost less. Overall, the change will be revenue-neutral for the Royal Mail, i.e. it is not expected to make any additional income from the new system.
Format Specifications
Letter
\r
- \r
- Envelope size less than 165mm x 240mm (C5 or smaller) \r
- Less than 5mm thick \r
- Up to 100g in weight \r
Includes: most letters, postcards, bills, statements, most greeting cards
Large Letter
\r
- \r
- Envelope size less than 250mm x 353mm (B4 or smaller) \r
- Less than 25mm thick \r
- Up to 750g in weight \r
Packet
\r
- \r
- Larger than 250mm x 353mm or \r
- Thicker than 25mm or \r
- Over 750g \r
Weight Band Changes
The previous pricing structure had 16 weight bands. There are now fewer bands, with each one covering a wider weight range. Each format has its own table of charges. In many cases the charges for letters and large letters are significantly cheaper than the previous counterpart.
What does it mean to you?
The One Price Goes Anywhere stamp price still applies to 1st and 2nd class letters up to 100g in weight, and will remain at 32p and 23p respectively.
However, substantial savings will be possible if you reduce the physical dimensions of your larger mailing items. For example by simply folding an A4 letter in half so that it fits into a C5 envelope the cost of postage will fall from 44p to 32p for 1st class, and from 37p to 23p for 2nd class.
Furthermore, whilst the size of the envelope will be smaller, because the weight bands have been extended, heavier articles can be posted at no extra cost. Therefore, additional inserts can be included without penalty. For example, a C5 envelope weighing 100g currently costs 46p for 1st class delivery. In the future this will cost only 32p, the same as a 60g letter.
In short, plan your mailings carefully to take full advantage of the format specifications and you will be able to minimise the impact of the system changes and possibly even reduce the overall cost of your postage
About the author
Diana Lees is the Managing Director of the mailing house, MailRight Ltd., which specialises in the preparation, fulfilment and posting of direct mail campaigns. For more information on Pricing in Proportion or mailing advice derived from 16 years experience in the industry, visit http://mailright.co.uk/
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