UK Publishers fight new pricing formula

Publishing companies will face distribution cost increases of up to 50% if Postcomm, the independent regulator of the postal industry, allows Royal Mail to move to a system of size-based pricing from April 2005. Ian Locks, chief executive of the Periodical Publishing Association, says: “At the extreme of the changes, some publications will be hit very badly especially, the lightweight tabloid formats. “Publishers will be faced with large (price) increases when distributing these magazines. Initially, there would have been a 150% increase but we have worked hard through representations to Postcomm to reduce this to 50%.” Royal Mail made an application to Postcomm in August last year to move from its existing weight-based pricing structure to one based on size and weight. It admits that “some customers will face increases” but it believes that “it has taken account of customers needs through our own research into size-based pricing”. In the application, Royal Mail states that charges for letters larger than A4 – that includes most magazines – would rise in price by some 30-60%. Postcomm hopes to put the proposals out for consultation by early summer. A spokesman adds: “These changes will not happen overnight and we will ensure that they are introduced in a manner that avoids unreasonable changes for users of the service.” Customers will be given one year’s notice before implementation. UK Mail, part of Business Post, will also move to a size-based pricing structure when this occurs. Ian Paterson, the firm’s head of UK regulatory affairs, says: “It is better for the industry as a whole for Royal Mail’s prices to be better related to cost. “When size-based pricing is introduced there will be little benefit in two different approaches in the industry. “However, as we will not be involved in the handling of individual items through the use of machinery but will be moving bags of mail, our prices will be less dependent on size than the Royal Mail.”