PPA and UK Royal Mail reach deal on size-based pricing

Royal Mail chief executive Adam Crozier has announced an agreement between Royal Mail and the PPA on size-based pricing.

Speaking at the PPA’s CEO Conference, Crozier said that the two organisations had reached an agreement on the last outstanding issue that had divided the pair.

This concerned the tolerance threshold of the surface of a mailing piece of 10mm thickness or above, where if the threshold was exceeded the item would be classed as a packet rather than a large letter, resulting in a substantial increase in costs. The PPA has succeeded in convincing the Royal Mail to increase this threshold from 4mm to 5mm.

However, the agreement saw the PPA drop a second proposal for the introduction of an intermediary price line for any item that is over 10mm thick, but the surface of which varies in depth between 5mm and 10mm. A PPA spokesperson said that the association wished to bring the uncertainty over size-based pricing to an end because it was holding publishers back from determining budgets.

Royal Mail and PPA thrash out final detail
Printing World, p 4 11-25-2004
By Emily Miller

The Royal Mail and the PPA have agreed on the final point raised by PPA relating to the switch to size-based mail pricing due to come in next year, ending two-and-a-half years of talks.

At the PPA’s ceo conference last week, Royal Mail chief executive Adam Crozier said that the two companies had reached an agreement on the variation on uniformity to be increased from 2mm to 5mm when a package is thicker than 10mm. The PPA maintains that this allows for inserts, and supplements which are vital for magazines’ business strategies.

“We’ve ended up with a manageable system, whereas before Royal Mail were proposing something that was frankly unworkable,” says the PPA’s director of circulation Nicola Rowe. “The amended system is more suited to the dynamics of our industry. We have expressed our concerns all along and we acknowledge that Royal Mail have listened and made amendments where possible.”

The specifications for Presstream, the service for publishers which allows them to post magazines and newspapers at discounted prices, now define three package types; large letters, packets and A3 packets.

The variation on uniformity is crucial because it takes account of production variances outside the control of printers and publishers such as inserts shifting or paper changing shape due to storage or transport. This avoids increased costs by having to class a magazine as an A3 package when it is not necessary.

Ms Rowe does not feel that printers will suffer as a result of the new system, but they may be held more accountable for postage costs: “I wouldn’t think printers will suffer as the publisher will still pay the postage. However, people may be much more aware of production variances which cause changes in thickness where this may not have been a problem before.”