Size, weight, thickness and price – Royal Mail opt for complex approach

After consulting customers about a move to Size Based Pricing (SBP) and for
a period Format Pricing during 2003 and 2004, Royal Mail has added further
confusion by now announcing its Pricing in Proportion (PIP) proposals.

Peter Carr, Chairman of Postwatch commenting on the proposals said: “We
understand and support moves by Royal Mail to price products in accordance
with associated costs. It is important that the dominant monopoly service
provider’s products are cost reflective in the UK’s fledgling competitive
market. Otherwise Royal Mail could unfairly subsidise some of its services
to retain market share.

“We will be considering Royal Mail’s revised proposals carefully and will in
particular be looking for the evidence that the proposals are in fact cost
reflective, revenue neutral and as customer friendly as possible. We are, of
course, concerned many domestic customers will find the change confusing. A
properly funded awareness campaign will help customers get to grips with
this important change.

“It is certain the Regulator, Postcomm, will use these new proposals as the
basis for a formal consultation. It is essential that consultation is
thorough and meaningful and that the outcome is not predetermined. Royal
Mail is pressing the Regulator to rush out a consultation document next week
and they always seem to get what they want – no fines etc.

“Postwatch has been promised by the Regulator that customers will be given
at least one year’s notice of the change. That notice has to start with the
publication of the Regulator’s final considered decision not the publication
of its consultation document.”