Small firms balk at post increases

Smaller businesses are concerned that changes to the Royal Mail’s postage rates this month will increase costs and mean more administration.
A survey by the Forum for Private Business, which represents about 25,000 small and medium-sized UK firms, has revealed that more than a quarter of the companies questioned believe their postage costs will rise by 15 per cent or more.
More than 60 per cent of companies think that not only will their costs increase but that they will have to spend longer on administration after the new size-related system is implemented on August 21.
The “pricing in proportion” scheme is the first significant move in Royal Mail’s strategy to become a competitive business after the industry was opened to competition at the beginning of this year.
It will see mail delivery priced according to size and weight instead of solely by weight in an attempt to reflect more accurately Royal Mail’s costs in delivering bulky items.
Encouraging consumers to post smaller letters should also make Royal Mail more competitive as this is the most profitable business for postal companies.
The change to the post office’s pricing is costing Royal Mail more than pounds 20m, including pounds 10m spent on a marketing campaign.
Former Orange marketing manager, Alex Batchelor, who is behind the campaign, argues that positive feedback about the changes has been received from large and medium-sized businesses.
He says that small businesses and consumer groups do not yet understand the system well enough to be sure how it will affect them. He claims that while some businesses will face increased costs, others will see prices fall.
“We have already contacted most of UK’s big businesses, who represent 90 per cent of mail volume,” he said. “We are now dealing with the consumer side of things, as if we had done this earlier, people would have forgotten.
“If you are a small business that posts a lot of bulky lightweight items then undoubtedly costs will go up, but if you are a small business that posts a lot of letters your costs won’t change. If you are a small business that posts a lot of heavy things your costs will most certainly come down.”
The Federation for Small Business said there will almost certainly be an increase in costs for businesses such as solicitors and registrars who are unable to fold large letters into A5 envelopes.
“There will definitely be a cost increase for some businesses and definite costs difficulties in the short term, but the hope is that there will be a bigger blitz of publicity to help with the growing pains as we adapt to the new system,” said an FSB spokesperson.
Royal Mail has said that two-thirds of business mail will be cheaper after August 21 and that small businesses can cut postage costs further by purchasing franking machines.