What will it be like to get the PiP with Royal Mail?

Publishers’
fears about the future of magazine distribution don’t just stem from
the OFT row. They are also worried that new postage charges could send
subscription costs soaring. Press Gazette asks Tom Wasilewski (right),
head of publishing at Royal Mail, to defend Pricing in Proportion (PiP).

Why PiP?

Full competition in the postal market is almost upon us, and Royal
Mail has to adopt a more commercial approach, ensuring our prices
reflect the true costs involved in delivery more accurately, while
pricing competitively against other mail suppliers. PiP, which comes in
on August 21 next year, is all about understanding costs and
reassessing our traditional pricing structure to remove historical
imbalances.

How will it affect postage costs?

Large
but lightweight items will cost more to send, taking into account the
additional resources that are required to process them. Compact but
heavy items will cost less. This will lead to a fairer system: an end
to the crosssubsidies currently occurring on postage pricing where the
cost of heavy but compact items subsidises light but bulky post.

But what was wrong with the old system?

In
a modern postal system, size and format are the main costs involved in
handling mail, and size is a better indicator of the costs involved
than weight. Large, bulky items cannot be sorted by machine, take up
more space in pouches, bags and vans, and therefore cost more to handle
at all stages of handling. However, weight must still be a
consideration in determining handling costs because delivery staff may
only carry a maximum of 16kg at any one time, and so can carry fewer
heavy items.

What would you say to publishers who fear that the cost of sending out subscription copies will skyrocket?

Despite the speculation about PiP, Royal Mail expects 80 per cent of
stamped mail and 70 per cent of business mail to be unaffected by these
pricing changes. Of the 20 per cent of affected mail items, half will
come down in price and half will increase.

We will continue to
offer advice and support to businesses and trade bodies working on
behalf of their members, who find they are affected by the price
changes.

Will there be any concessions for those publishers whose costs are increasing?

There are no industry-specific mitigation schemes to support the
introduction of PiP. However, Royal Mail does have a compensation
scheme for the small number of customers who are significantly
affected. Any customer whose total corporate postage cost increases by
50 per cent is eligible (for publishers this precludes individual title
impacts). The aim is to assist in the transfer between existing and new
prices over a maximum limit of two years.

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