Wholesale Postage Price Increase on Business and Admail in July 2024: A View from bakergoodchild
Once again, Royal Mail has disappointed the mailing industry by announcing a further double-digit increase in the prices for both business and advertising mail to take place on July 1, 2024. This price hike will take place only 10 months since the last significant one took place (October 2, 2023), yet another reduction in the time period between price increases, which for a number of years had consistently taken place every 12 months.
Royal Mail points to the decline in mail volume from 20 billion (2004/05) to 7 billion (2023/24) as being one of the contributing factors, as the cost to maintain the current Universal Service Obligation (USO—one price for any item nationwide) is not sustainable, and the obligation to maintain the USO has contributed greatly to Royal Mail posting losses of £419 million in 2022/23 and £319 million for the first 6 months of 2023/2024.
We could also argue that the cost of lost revenue from the protracted industrial action at various times over these periods plus the settlement that was accepted to finally end that dispute is also a significant factor for Royal Mails, as is the perceived drop in quality of service that the strikes in particular compounded.
As the last price increases were announced, it is worth highlighting that the most recent JICMAIL reporting continues to demonstrate mail’s viability as an alternative to more traditional forms of media advertising, and there will be some innovations over the coming months that work in tandem with the JICMAIL platform, which could be an asset to marketers in particular.
Impact and Implications of the Price Hike on Businesses
As with all price increases, the decision by Royal Mail to introduce them in July is damaging and likely to have a large impact on businesses that rely heavily on their services. Those sending high-volume direct mail mailings are particularly vulnerable, as this will require a review of current strategies for posting material in order to minimise cost increases.
There has been a slight uplift in the delivery performance of Royal Mail since the October 2023 price increase, but it is still well below the required level, so once again, we hope that these rate changes will have a positive effect on the delivery timeframes we and our clients experience.
As with the last round of price hikes, the Economy product price has increased at a slower rate than the 2nd Class option. Royal Mail’s rationale for that is that Economy product has become one of the most popular products for its customers to use, which is why there is a lower increase. Our argument would be that as the 2nd Class service isn’t performing as it should, a number of mail users are switching to Economy as there is no marked difference in delivery times!
Although some parcel service prices did increase in April 2024, the perception now is that Royal Mail really wants to focus their growth strategy on parcels. After all, why would you be delivering parcels 7 days a week but propose reducing the delivery of what was once your core product to potentially 3 days (2nd class mail delivered every other day Monday, Wednesday, and Friday)? This all forms the USO consultation, which is currently taking place, so no decision is imminent, but we feel it demonstrates the road down which Royal Mail wishes to travel.
Despite all of that, it is very important to maintain a positive outlook on post, which, as JICMAIL has demonstrated, is far from obsolete. bakergoodchild, its peers, suppliers, and other high-volume mailers will continue to hold Royal Mail to account and lobby on behalf of our customers and the industry so that we have a postal service that offers value for money and hits the delivery targets we expect.
Future Outlook and Strategies for Businesses Amidst Rising Mail Prices
At bakergoodchild, we are committed to providing our customers with cost-effective solutions and ways of working that maximise efficiency. We’ll continue to evaluate Royal Mail prices in order to protect our customers from unnecessary increases.
Our team of experts remains dedicated to finding effective mailing strategies for businesses, regardless of the latest pricing changes. We offer various services to mitigate these increases, ranging from postal incentives and pack design to data cleansing services, postal service, and product reviews.
By working together, we can ensure we continue to maximise the potential of postal services.
