COMMENT
The Great Postal Price Shake-Up

By Alison Hunt (TMFAlly)
August 18, 2005

If you've ever received a bulky A4 envelope through the post whose only adornment is a first class stamp, you may not find news of the forthcoming Royal Mail pricing changes that surprising. In just over a year (September 2006) and following pricing structures seen in Australia, Canada, Japan and the USA, the Royal Mail is to introduce a new method of calculating how much it will cost to post letters in the UK.

Instead of charging simply by weight as it does at the moment, the new system is set to charge by size, too. Some smaller, heavier items (such as catalogues and magazines) will become cheaper to post, whilst larger, lighter items (such as posters rolled up in cardboard tubes) will become more expensive.

The changes are expected to affect around 20 per cent of stamped mail for consumers and 30 per cent of business mail. And as Royal Mail believes it loses around 5p on every item of First Class stamped mail and 8p on every item of Second Class (a total loss of £235m in 2004/5) it clearly hopes that this new pricing structure can redress the balance.

Proposed Public Tariff Structure and Sizes

Proposed New Size	Maximum Thickness	Weights	Content would include
Letter - Size not to exceed 240mm x 165mm This size is larger than A5 (half a sheet of standard paper).	5mm	0-100g	Most letters, postcards, bills and statements, some brochures and catalogues, most birthday cards.
Large Letter - Size not to exceed 353mm x 250mm. This size is larger than A4 (a standard sheet of paper).	25mm	0-100g 101-250g 251-500g 501-750g	Large letters (containing unfolded sheets of standard paper). Most brochures, catalogues and company reports, some magazines. CDs and DVDs. Most larger birthday cards. Most magazines.
Packet - Any item which is more than 25mm thick or longer than 353mm or wider than 250mm, or heavier than 750g.	-	0-100g 101-250g 251- 500g 501-750g 751-1000g	VHS cassettes, books, some magazines and catalogues, parts and samples, prints and posters in large or cylindrical packaging.

Pricing Structure

Format	Weight	First Class Stamps	First Class Meters/Account	Second Class
Letter	0-100g	30p	29p	21p
Large Letter	0-100g; 101-250g; 251-500g; 501-750g	42p; 61p; 85p; 123p	41p; 60p; 83p; 120p	35p; 53p; 72p; 105p
Packet	0-100g; 101-250g; 251-500g; 501-750g; 751-1000g	94p; 119p; 159p; 206p; 253p	92p; 116p; 154p; 200p; 246p	80p; 104p; 132p; 166p; 199p

However, in addition to the changes in store for Royal Mail, there are more changes afoot. The whole postal market is to be opened to full competition from January 1, 2006. Rival mail companies, large and small, will be able to set their prices at any level they choose from this date - which is a full nine months before Royal Mail's pricing comes into play.

We'll have to wait and see how we are affected by these changes. Those that post large items regularly, such as some sellers on eBay for example, will probably find their costs increase significantly, whilst those sending small, heavy letters will probably save. However, the idea of being able to post 100g in a small envelope for a set price of 30p does sound surprising - it will be interesting to see how many of these envelopes actually survive the journey in one piece. And let's hope the increased competition will bring a better deal for us, the consumers.

Find out more at the Royal Mail website.