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2012 brought with it highs and lows, and although most of us were enjoying the glory that was the Olympics — and then living on a high for the rest of the year — SME businesses were painfully aware of the large increase in Royal Mail packaging prices. So, when Royal Mail announced that in 2013 they were keeping stamp prices static and they were working on making things simpler, we all breathed a sigh of relief. However, when we actually arrived at the post office on that fateful April morning and the parcel that used to cost £2.70 had a new price tag of £5.65, we all felt that full English reducing the flow of oxygen to our hearts.

Now, rest assured it’s not all that bad, but what was most frustrating about the whole experience was that no one could explain the price change in simple terms. It probably didn’t help that we were pretty depressed that it was still 0°C one month into spring. So upon arriving home, having narrowly escaped heart attacks and having braved the icy weather, we called on our good friend Google, demanding answers.Unfortunately, this only made matters worse as we couldn’t find anything helpful through Google! After trawling the web, we were unable to find a comprehensive explanation outlining Royal Mail’s 2013 price changes. This of course raised our blood pressure even further, as it is common knowledge that if Google cannot deliver answers, the apocalypse is almost certainly nigh.

Now I realise that at this point things may have seemed pretty bleak, but we are here to put your minds at ease and to put right all that is wrong in this scenario. We will do so by providing that comprehensive explanation of Royal Mail’s 2013 price changes, which will also assist in redeeming Google’s reputation — no need to thank us Google.

 

Times, they area-changing

2013 brings with it a fair amount of change from Royal Mail, and to go into detail about each and every one may result in a very long and tedious post. So, we will only be addressing those which are most significant and will have the greatest effect on SMEs who deliver parcels within the UK. Right, so Royal Mail has indeed kept their promise and letter stamp prices are remaining the same. This is great news for some companies, especially those selling small, light items. But if  the last time you sent a letter was when your mother forced you to hand write one to your now deceased grandmother, this won’t be much cause for celebration. Besides, most companies these days are trying to go paperless by funneling clients online.

The changes which are going to be most relevant to the SME business owner are the following:

  •  The newly introduced 2.5% fuel surcharge for contract customers
  • Reduced weight bands
  • Changes in compensation
  • Newly defined dimensions

We will focus on the latter two in this list.

Hasta la vista, compensation

Say goodbye to more than half of your compensation if you’re sending first or second class unrecorded delivery. Royal Mail is dropping their insurance for these services from £46 to £20. They have attributed this decision to seeking alignment with other European countries who offer significantly lower (or no) compensation for equivalent services. On the upside they have increased their signed for compensation from £46 to £50…

Size does matter

If anything is going to really get you riled up, it’s Royal Mail’s redefined dimensions. In the bygone days of 2012 dimensions were simple. If your package was greater than 3.53 x 25 x 2.5cm or in excess of 0.75kg it was classed as a packet. You then paid various amounts depending on which weight band you slotted into (of which there were 14).  You can take a look here at the 2012 price guide.

The new dimensions are a completely different ball game. If your parcel weighs less than 2kg and has a dimension of 45 x 35 x 8cm or less, it is classified as a small parcel. If it is greater in dimension than 45 x 35 x 8cm, but less than 61 x 46 x 46cm and weighs anywhere up to 20kg, then it’s classified as a medium parcel. Confused yet?

We think what makes Royal Mail’s 2013 price changes so challenging to understand is that they are tricky to compare to 2012 dimensions and labels. So, in an attempt to aid comparison we have put together a little table allowing you to directly check what you would be paying in 2012 versus 2013 (both represented in first class prices).

 

Dimensions (in cm)

Weight

Price in 2012

Price in 2013

% Difference

Less than 45x35x8

0-0.75kg

£2.70

£3.00

11%

0.75-1kg

£4.30

£3.00

-30%

1-1.25kg

£5.60

£6.85

22%

1.25-1.5kg

£6.50

£6.85

5%

1.5kg-1.75kg

£7.40

£6.85

-7%

1.75-2kg

£8.30

£6.85

-17%

Less than 61x46x46

0-0.75kg

£2.70

£5.65

109%

0.75-1kg

£4.30

£5.65

31%

1-1.25kg

£5.60

£8.90

59%

1.25-1.5kg

£6.50

£8.90

37%

1.5kg-1.75kg

£7.40

£8.90

20%

1.75-2kg

£8.30

£8.90

7%

2-4kg

£10.30

£15.10

47%

4-5kg

£10.30

£15.10

47%

5-6kg

£13.80

£21.25

54%

6-8kg

£17.30

£21.25

23%

8-10kg

£20.80

£21.25

2%

10kg-12kg

£24.30

£32.40

33%

12kg-14kg

£27.80

£32.40

17%

14kg-16kg

£31.30

£32.40

4%

16kg-18kg

£34.80

£32.40

-7%

18kg-20kg

£38.30

£32.40

-15%

 

From above we can see that if you had a parcel which weighed 1.1kg and had a dimension of 45 x 40 x 20cm you were paying £5.60 in 2012. For this same parcel you will be incurring a cost of £8.90 in 2013, representing a 59% increase in cost.

This price increase is a direct result of the change in dimension criteria. In 2012 there weren’t really any restrictions on dimensions, meaning you could send the parcel in as much bubble wrap as you so wished. This change is especially relevant if you want to be classed as a small parcel, which would in some instances allow you to save money on 2012 prices, but at the very least would show a deflated cost increase. However, Royal Mail has cleverly added a parameter of 8cm, which is likely to trip up your small parcel classification.

Right, so let’s try and visualise 8cm. Your smart phone is almost certainly greater than 8cms in length. An iPod Nano 6th generation is 9cm in length. The length of my mouse is closer to 10cm and a pack of Wrigley’s extra ice gum is just under 8cm. I think you get our point — 8cm does not give you a lot to work with.

This means if you are sending an item which weighs less than 2kg, such as a helmet, a pair of shoes, a kettle, a mixing bowl etc., you’ll be classed as a medium parcel, because you violate the 8cm rule.

Now for the good news

It’s not all bad. Royal Mail has made several positive changes which offer some great benefits:

  •  If your parcel is16 x 16 x 16cm or under and weighs less than  2kgs you’ll be classed as small package
  • Second class is now offered with signature
  • Royal Mail has a new service called “24” and “48” which offers discounts to businesses. If you send more than 1000 parcels in a year (about 20 per week) you are now able to make use of this service
  • 2nd class is now offered for all weight bands, whereas in 2012 it was only offered on packages up to 1kg

Onwards and Upwards

In the words of the great Charlie Brown “in the Book of Life, the answers aren’t in the back.” And let’s face it, times are tough and price increases are inevitable. The goal of this post is not to point fingers, but rather to offer one good point of reference which will translate what these changes mean for you. There are always other options to assist in cost cutting,such as making use of Franking Machines,using smart packaging or taking a contract out with a courier. We will be following this post up with one which will assess what alternative choices are available. Until then, remember Charlie Brown’s words of wisdom and enjoy the sun, which has finally shown its face.

 Written by Trilby Rajna, Srearh Marketing Assistant at Apporoved Index


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