Royal Mail Price Changes: from 2nd April 2012

by Rich B

Here are the main changes Royal Mail have announced which will affect the market from 2nd April 2012. If you use mailing as a significant part of your business, give your local Webmart Print Consultant a call to help you navigate your way through the changes or help with reengineering your print.

VAT Changes
As of April 2nd, anything that’s not stamped or put through a franking machine will be subject to VAT. Which won’t be

Royal-mail-vat-increase

Be prepared for VAT on your mailings!

a problem for VAT registered businesses but will be a cost for non-VAT registered businesses as this means they’ll be immediately hit with a 20% increase in price.  People who can’t claim VAT back include insurance companies, charities and universities – and some businesses within financial services industries (consult your tax advisors to see if you’re affected).

There is a tariff coming out aimed specifically at people who can’t claim VAT back called the Standard Tariff Letter VAT Exempt which will give a small discount on the price of a second class stamp and there will be no bulk discounts available. So a comparison needs to be done against other available tariffs (such as the advertising tariff) to ensure it’s worth switching over to this tariff.

As always, your Webmart Print Consultant is best placed to advise on your options, including DSA (down stream access) versus Royal Mail.

Bulk Mail Transformation Scheme
The Transformation Scheme has been brought in to simplify the product range as there are so many schemes and tariffs currently available.

The tariff changes are not blanket price changes so it’s quite complicated to understand the impact the changes will have on individual mailings. Most prices will rise (surprise surprise!) however Royal Mail do expect some of their customers to be actually paying less, including Packet Post customers with mailings under certain weights who may experience a drop in price.

Having said that, hardest hit will be customers using Packet Post through Mailsort 1400 as Mailsort 1400 will no longer be accepting packets.

New Product Areas
These are the new areas Royal Mail are focusing on and have split down their mailing categories into the following sections to make them more understandable to customers:

  • Advertising Mail
  • Publishing Mail
  • Business Mail

Generic Changes
2nd Class mail –  traditionally 2nd class was 2-3 working days delivery but is now coming down to 2 working days.

Economy (previously called Mailsort 3)* – traditionally targeted delivery within 7 working days but that’s now coming down to 4 working days, giving clients a much tighter focus for staffing up call centres (and which is much more in line with downstream access providers). Delivery in 4 working days means if it’s posted on the Monday, it’ll hit the doormat on the following Friday at the latest.

Economy can also be combined with the Multistage Service (see below) so teasers or follow up mailings can be produced and mailed (within 6 months) to a main product mailing and take advantage of the Economy rate.

Note: that Saturday is counted as a working day for deliveries, but not for dispatch.

royal mail logo

To get the lowdown on Royal Mail changes, give Webmart a call.

ASBoF Tarrif
Advertising Standard Board of Finance (ASBoF) is a regulatory body to which it was optional to pay a levy of £2 per 1000 mailed items to ASBoF (which can be recouped from ASBoF) on all mailings. From April 2nd, this will no longer be optional, although the levy can still be recovered from ASBoF. This means that on a £3000 cost, £6 will be payable to ASBoF. This fee won’t be charged against Business Mail as, by definition, it won’t be classed as Advertising Mail.

Mailsort Options
These are being reduced from four different mail sorts to just two: High Sort and Low Sort.

High Sort is the equivalent of the old Mailsort 1400 and sorts the mail to the delivery office level.

Low Sort is equivalent to Mailsort 70 and sorts the mail 88 ways for delivery directly to mail centres.

Advertising Mail
Advertising Mail is generally the lowest cost option. But what constitutes Advertising Mail?

In a nutshell, it’s Items with a uniform message intended to promote sale of products or services.

Advertising Mail has to include a ‘seed’ item which is checked by Royal Mail to ensure it complies with advertising mail regulations.

The price increase for Advertising Mail will typically be 3-4%.

Key changes to Advertising Mail:

  • 2 sorting levels – High Sort and Low Sort.
  • VAT payable
  • Now available for packets
  • Polywrapped items can now be sorted – both high and low sort – but have to be minimum large letter size

Advertising Mail Multistage (old Mailsort light)
An interesting service if you wish to mail before or after a main mailing as part of a campaign. To qualify there has to be a minimum 40000 items (in total across all mailings in that single campaign) and all have to be machine sortable. Maximum number of items before the main product is one item. After the main item, the maximum number of follow up items are 3 (up to C5 in size).

Sustainable Advertising Mail
No real changes here. Note, biodegradable polywrapping is excluded from this scheme because many local councils don’t have the facility in place to recycle it.

Publishing Mail (currently Press Stream)
Many publishers may be using Press Stream currently, which is only available on first and second class options (i.e. delivery in up to 2-3 days). Publishers may save by going to Level 4 sort which increases the delivery time by 1 day but could save 3% on delivery.

Business Mail
The main change is that there will now be no ASBoF levy on business mail and now large letters can be sorted in poly bags so these can access Low Sort.

Business Reply
Is a service where postage-paid cards are included for customers to reply direct to the sender and you only pay for the responses you receive. All are first & second class responses, the difference being Business Reply Standard may be non-machine sortable whereas Business Reply Plus has to be machine sortable and is lower cost.

For more price change info. check out www.royalmail.com/prices2012.

Update:
If you’re mailing after 2nd April you must be using the new mailsort database. However some mailing houses have agreed a 6 week’s period where they’ll accept mail using the old database. Depending on mailing house, the cut-off date will be anywhere between 9th April and 21th May. Call your Webmart Consultant for up to date information on cut-off dates and penalties.

Product re-engineering is a good way forward to try and minimise the impact of these changes – call your Webmart Print Consultants to discuss your options.

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