Basic HTML Version
12
| p2p Magaz i ne | Spr i ng 2013
MAILING
01732 759725
Cutting the cost of post
Royal Mail has frozen the price of a first
and second class stamp, but franking still
offers a big cost saving
In April last year, Royal Mail increased
the price of a first class stamp by 30%,
from 46p to 60p, and the price of a
second class one by 39%, from 36p to
50p. Increases for franked mail were
significantly lower – 13% for a first
class letter (39p to 44p) and 10% for a
second class letter (28p to 31p).
This year, Royal Mail broke with recent
tradition and kept prices for First and
Second Class stamps the same, while
increasing the cost of franking from
April 2. The decision not to increase
stamped mail charges for standard and
large letters will benefit small businesses
and consumers that still use stamps.
However, it does not seriously weaken
the case for franking, which is still
massively cheaper – 21% for a first class
letter and 34% for a second class letter –
and a lot more convenient than stamps.
Totalpost Managing Director David
Hymers said: “There is a strong business
case for using a franking machine.
Companies that mail an average of eight
to ten items a day can realise savings
and it is this that will continue to prompt
organisations to make the switch. Even
without Royal Mail increasing the price of
first and second class stamps, but levying
a small increase on metered mail this
month (dependent on the service, size and
weight of the item), the cost differential in
favour of franking remains significant.”
Totalpost offers a 12-month, low cost,
entry-level franking machine contract: it
manages the finance in-house and at the
end of the period, customers can choose
to upgrade, carry on or hand the machine
back.
“We introduced this to encourage
first-time users to test the water,” said
Hymers. “Around 10% of our present
signed business is under this new
contract and we expect that this will
increase further next year. Our ethos is
to provide a cost effective and complete
service for our customers, which is why
we have also launched an all inclusive
option. Customers can choose to pay
a set monthly fee that includes the
rental, consumables and maintenance.
This provides them with a simplified
procurement solution, with a single point
need or use VAT applicable products (or
use them so little that the loss of a VAT
reclaim of 30 or 40 pence is offset by
the lower machine costs) and so don’t
need to upgrade their machines.
Other benefits
Cheaper postage is not the only benefit
of franking. Colin Forrest, Head of
Marketing for UK and ROI at Pitney
Bowes, points out that integrated
weighing scales on even low-end
models eliminate the cost of over- or
under-stamping. “This safeguards
against overpaying for post and ensures
that businesses never run the risk of
underpaying, which can be costly,
particularly with surcharges increasing
to £1 for every underpaid domestic item,
plus the underpayment amount on each
David Hymers, Managing Director
Totalpost
Colin Forrest, Head of Marketing,
UK & ROI, Pitney Bowes
Almost nine
out of 10 items
(88%) are sent
by business
and the public
sector.
Continued on page 14...
of contact, one invoice and reassurance
that service is also included.”
The introduction of Totalpost’s new
pricing model was in part driven by Royal
Mail’s decision last year to charge VAT
on some services and add-on services
such as special delivery, recorded delivery
and packets. This led franking machine
manufacturers to introduce new models
with built-in Royal Mail approved
‘smart meters’ that incorporate VAT in
calculated postage costs and print a VAT
receipt on services used.
“The new VAT rules meant many
businesses had to upgrade their franking
machines as older models didn’t have the
technology to calculate the new costs
and without the right machine, it’s
impossible to claim the VAT
back, which can involve
companies losing
money,” said Hymers.
At the entry-level,
many businesses don’t