Royal Mail has increased the prices of its stamps again in 2014 – an act that has caused controversy among many after the business was sold off. The latest round of price changes came in on 31st March 2014.
How much have first and second class stamps gone up by?
The price rises have seen the cost of a first class stamp rise to 62p. The previous price was 60p, indicating a rise of 2p per stamp. The new price of a second class stamp is now 53p, a rise of 3p from the previous 50p. These are the first rises to occur for two years.
What about prices for other stamps?
Other commonly used services include the large letter first and second class services. The large letter first class stamp has gone up by 3p, rising from 90p to 93p. There has been a 4p increase in the price of a second class stamp. This has increased from 69p to 73p.
The first price rises since Royal Mail was privatised
Royal Mail was privatised in October 2013. The share price was announced on 10th October and conditional dealing in shares began the day after. On the 15th unconditional dealing became possible. It was said that Royal Mail needed financial support from private sources in order to continue to operate the service currently provided.
Many people are disappointed that a price rise has been announced just a few months after privatisation took place. However it is likely that further price rises will occur in the years to come, if Royal Mail is to continue providing a good service.
Royal Mail asked PricewaterhouseCoopers (PwC) to assess the likely volumes of mail that will be experienced between 2013 and 2023. They gauged that the business is likely to see a reduction of around 5% in the volume of letters posted annually until 2018, dropping to 4% per annum after this. These figures follow on from the 3.1% annual drop in letters mailed between 2005 and 2008, and a more significant 6.3% annually between 2008 and 2013. However parcel volumes have been increasing and are likely to continue to do so in the next few years.
The internet is responsible for much of this drop in letters. Email is easier, free and faster, offering significant benefits over sending a letter. However the drop in letters being sent is thought to eventually slow over the coming years.
How can you reduce mailing costs?
Buying the odd first or second class stamp from time to time is very different from buying lots of postage on a daily basis. Those who post the odd birthday card and bill payment may not notice the price rises too much. However if you own a business and post a lot of mail the small increases soon add up.
If you do send a significant amount of post on a daily basis, a franking machine is the best option if you wish to reduce the amount you spend on mail services. When Royal Mail announced the new price changes for 2014 they also made adjustments to their franking prices. However franking still represents excellent value.
A new franking system called Mailmark is gradually being brought into play. If you have a franking machine that uses the Mailmark system you will achieve the best prices for your mail. On average Mailmark prices tend to be a penny or two cheaper than non-Mailmark prices.
As we have already learned a first class letter weighing less than 100g will now cost 62p. However if you have a Mailmark franking machine the cost will be just 49p. This represents a saving of 13p per letter. The price of a second class letter of less than 100g will be 35p when franked, as opposed to 53p normally. This gives you a saving of 18p per letter.
There are further savings to be enjoyed on other services as well when franking is used. Take large letter mailings for example. A first class large letter costing 93p normally would cost 74p with Mailmark franking. This saves 19p per letter. Second class large letters would be 73p with stamps and just 60p with franking, saving 13p.
As you can see there is the potential to save a considerable amount every day, even if you post smaller volumes, perhaps between 20 and 30 letters for example. Businesses posting larger volumes of mail each day will notice significant savings that would be more than enough to warrant buying or renting the franking machine in the first place.
Clearly franking machines offer a way to cut postage costs for those who do send out a lot of mail. This could be the ideal way to reduce business costs and soften the blow of further price rises in the future.