Postal Rates Rocket
Ofcom, the communications regulator, has allowed Royal Mail to increase prices in order to "safeguard the UK’s universal postal service" saying that the service is at "severe risk".
In it’s own press release, Ofcom states that the decisions will give Royal Mail greater freedom in being able to set its own prices and to "ensure that consumers and competition are protected"
After the announcement, the future price of a first-class stamp will rise by 30% from 46p to 60p and second-class stamps will rise from from 36p to 50p (up by 39%) from the 30th April 2012.
The price leap is, in percentage terms, the biggest annual increase since 1975.
Second-class stamps will, however, be subject to a price cap meaning that they can not rise above 55p but this figure will rise in line with the Consumer Prices Index (CPI) over the next seven years.
The "severe risk" to Royal Mail’s postal service apparently comes from the decrease in "snail mail" as text messages, email and instant messaging take over.
Whilst 16 billion letters were delivered to around 28 million postal addresses last year the volume of mail has decreased by 25% since 2006.
However, small businesses that use franking machines will see rises of 5p from 39p to 44p for first class mail and an increase in postage rates from 28p to 31p for second class letters.
With just over a month to go until the price rises, Britain’s 2 and a half million SMEs don’t have a lot of time to deal with the forthcoming changes.
Phil Hutchison, Marketing Director of Pitney Bowes, said:
“Initially this may appear very challenging for Britain’s SMEs, but there are some alternatives to consider. For instance, many customers can cut costs immediately by moving to metered mail which has become increasingly attractive financially.”
“Those who want to stick with stamps can also make savings by folding documents into letter format.”
Recent consumer research by Pitney Bowes has shown that customers still enjoy physical mail and in many cases it has clear advantages over email. Pitney Bowes believes that both forms of customer contact are likely to exist alongside each other for many years and SMEs should take the opportunity to review their entire communications strategy.
Fiona Debell of The Digital Mix, whose Qmailer app is used by is4profit for their small business newsletter added:
“The recently announced increase in postal costs will have an enormous impact on enterprise. Keeping and eye on the bottom line is key to success so how do you handle a 30% cost increase from a supplier?”
Fiona went on to suggest that small businesses might be wise to take this opportunity to reconsider their options in light of the huge postal rate increase.
“Think about it, does your businesses use the post to invoice? Have you ever analysed the cost? Once you take into account, printing, stationary, postage, time – yours and delivery – it soon adds up. You then have to consider whether your invoice has been received. How do you know? Do you take the time to call and check? Use email. You can track the invoice, tell exactly when it has been opened and follow up automatically.”
For small businesses looking to continue using the postal service, Pitney Bowes metered mail and franking machines are a good option to reduce the cost of "snail mail".