Royal Mail

[Cobbs]

I think I may have to give up running a business. The price of a large letter has today risen from £1.15 to £1.55 - an increase of more than 30%. When I started, 11 years ago, the price was 69 pence. I realise that things are getting more expensive, but surely this is taking the proverbial? If I want to continue, I'll have to put the 40 pence extra on even the smallest item and so will everyone else, so adding to the inflationary cycle.
People will say to find a different courier, but living as I do in a rural location, Royal Mail is the only one that will collect unless I'm sending much larger amounts than I do and last year that service cost very nearly an extra grand, I'm assuming that too will go up this year, even though they make a collection from a box about 50 yards up the road.
I realise that there's bu66er all to be done about it, but it's very frustrating...

 

[Geoff_S]

What do you think is reasonable for postage?

 

[Phil Pascoe]

Below are the Royal Mail prices for 2023 (from 2nd October 2023)

UK Standard Stamps / Online
		1st Class
Letter	100g	£1.25
Large Letter	100g	£1.95
	250g	£2.70

 

[Cobbs]

It's not down to what I think. It's the rate of inflation within Royal Mail. Given that in 2012 when I started, the price for a 100g large letter was 69 pence and they were presumably making a profit on that, I find it hard to see how they justify an increase of very nearly 107% in that time - pretty sure headline inflation has been nowhere near that. And to take it from £1.15 to £1.55 in one jump??
I sell some stuff from my own website, some through ebay. To take ebay as an example, I will now have to increase my prices hugely. My cheapest item sells for £2.50, including postage, it will now have to go up to very nearly £3, because don't forget that any increase in postage is increased again by ebay, who charge over 17% on all incomings, including postage charges.
I realise that I'm coming across as whining, but this will be the death of my business - I'm already charging what the market will stand and I know for a fact I'm not the only one in this position.

 

[sneggysteve]

Prices dont seem that bad compared to Evri ?

Parcel weight	ParcelShop or Locker drop off	Courier collection
Postable (Under 1kg)	Next Day: £3.19 Standard: £2.59	-
Under 1kg	Next Day: £3.68 Standard: £2.99	Standard: £3.98
1kg to 2kg	Next Day: £5.28 Standard: £4.44	Standard: £5.44

 

[benhen31]

To be honest, the fact that Royal Mail will come to your house, pick up your letter and then deliver it to any address in the entire of the UK within a few days for just £1.55 I think is pretty impressive. They're obviously not making any money at all on that. Royal Mail have always made a loss on letters (which is why couriers don't like doing letters) so the big percentage jump is an attempt to close that gap.
Price rises are annoying, but I don't think I'd get very far on £1.55 trying to deliver it myself!

 

[Cobbs]

...and let's not forget the £996 a year on top of that for the privilege, when they pass the door anyway. It used to be that the goods were collected at the same time as my post was delivered, for free, but that seems to have gone by the wayside. My point is that I'm being priced out of the market - the vast majority of my sales are large letters for small items - if I was sending parcels all the time then yes, their rates are not too bad, but I'm not and to be forced to increase my selling prices by such a comparatively huge amount is going to cost me a lot of customers.
As I say, I realise that there's sod all I can do about it.

 

[Jacob]

I think I may have to give up running a business. The price of a large letter has today risen from £1.15 to £1.55 - an increase of more than 30%. When I started, 11 years ago, the price was 69 pence. I realise that things are getting more expensive, but surely this is taking the proverbial? If I want to continue, I'll have to put the 40 pence extra on even the smallest item and so will everyone else, so adding to the inflationary cycle.
People will say to find a different courier, but living as I do in a rural location, Royal Mail is the only one that will collect unless I'm sending much larger amounts than I do and last year that service cost very nearly an extra grand, I'm assuming that too will go up this year, even though they make a collection from a box about 50 yards up the road.
I realise that there's bu66er all to be done about it, but it's very frustrating...

Privatisation leads to poorer services and higher costs, in pursuit of shareholder profit and management bonuses.

 

[Jacob]

To be honest, the fact that Royal Mail will come to your house, pick up your letter and then deliver it to any address in the entire of the UK within a few days for just £1.55 I think is pretty impressive. They're obviously not making any money at all on that. Royal Mail have always made a loss on letters (which is why couriers don't like doing letters) so the big percentage jump is an attempt to close that gap.
Price rises are annoying, but I don't think I'd get very far on £1.55 trying to deliver it myself!

https://www.studysmarter.co.uk/expl...h postal,demand for parcel delivery services.

 

[Sideways]

When you did a SWOT analysis (Strength, Weaknesses, Opportunities, Threats) on your business (when you made your original business plan or annual review) you recognised the existential risk to the business from being 100% dependent on one delivery service from a sole supplier ?
I'm not having a pop at you, I do sympathise, but I'm certain that many small businesses are in the same position or worse.
Everyone who sells more or less exclusively through Amazon, ebay etsy, whatever could have their sales platform pulled from under them on a few days notice if those platform operators change their policies. I've certainly encountered a few businesses that fell foul of Amazon, etc. I'm sure I'm not alone.
Qualitatively this is no different from being hit by rent / rate rises that are putting small companies out of business or making them give up warehouse space etc and scale back to home based.
If you are doing a level of business that is significant TO YOU, you need contingency plans, alternatives, or acceptance that you're living on the edge and it can all be wiped out suddenly.
Like the workforces that got used to regular overtime earnings and took out mortgages and loans on the assumption that it would always be there, it's a nasty surprise but entirely predictable that times change.

 

[benhen31]

https://www.studysmarter.co.uk/expl...h postal,demand for parcel delivery services.

They make money on parcel deliveries, they lose money on letters. They only continue to do the universal letter service because it's required of them by law - thankfully! That's why the courier companies don't bother with letters and just stick to the profitable bit which is parcels. (also, to be fair, last year Royal Mail lost half a Billion pounds overall, so it's not always making a profit!)

But yes, in general, privatisation is not a great idea in many cases.

 

[Cobbs]

When you did a SWOT analysis (Strength, Weaknesses, Opportunities, Threats) on your business (when you made your original business plan or annual review) you recognised the existential risk to the business from being 100% dependent on one delivery service from a sole supplier ?
I'm not having a pop at you, I do sympathise, but I'm certain that many small businesses are in the same position or worse.
Everyone who sells more or less exclusively through Amazon, ebay etsy, whatever could have their sales platform pulled from under them on a few days notice if those platform operators change their policies. I've certainly encountered a few businesses that fell foul of Amazon, etc. I'm sure I'm not alone.
Qualitatively this is no different from being hit by rent / rate rises that are putting small companies out of business or making them give up warehouse space etc and scale back to home based.
If you are doing a level of business that is significant TO YOU, you need contingency plans, alternatives, or acceptance that you're living on the edge and it can all be wiped out suddenly.
Like the workforces that got used to regular overtime earnings and took out mortgages and loans on the assumption that it would always be there, it's a nasty surprise but entirely predictable that times change.

I fell into this business. I'd spent the best part of thirty years sat on roofs, nailing slates. My hobby was turning and being worried about dust, I developed and got to market a sanding system that captures the dust from faceplate turning before it gets in the air. From that, it led on to supplying sanding sundries and the business grew and I stopped hanging out on roofs. This may not have been the best way to do it, I accept, but that's how it happened. It was all good for the past 11 years, but I suspect this will be the end of it.
As an aside, the tool I developed has bitten the dust too (pun intended) - the internal bits I had to get made went from about £25 in 2017 to £95 in 2022. Given that the tool was selling with a pack of discs and including P+P for less than 50 quid...

 

[flh801978]

I presume you are pad-o -vac?
you just got to put your prices up to compensate for the extra postage and dont sell such small quantitys (<£5)
try and get customers to spend more in larger packs
and charge for postage and make it free after a spend of £50 perhaps

Ian

 

[Cobbs]

I presume you are pad-o -vac?
you just got to put your prices up to compensate for the extra postage and dont sell such small quantitys (<£5)
try and get customers to spend more in larger packs
and charge for postage and make it free after a spend of £50 perhaps

Ian

Yes, I know - just hate having to charge people more. (Just read that back and it sounds sulky - really not meant to, I appreciate your input.) And yes, that is me. I do sell in quite large quantities and that pays well, bizarrely it's almost always to those in the auto business, which is a little ironic given that I was aiming for the woody types, the little old men in the shed at the bottom of the garden to start with and I'm about as far from a petrol-head as you can imagine. I've been known to struggle with a wheelbarrow before now, even to the point of having broken a few ribs while supposedly in control of one...
But you're right, I'm going to have to rethink it all, I'm just a bit grumpy because it was all going so nicely and paying the bills without me having to put much thought into it.

 

[Blackswanwood]

I don’t understand why this is the death knell for your business. Surely it’s a level playing field as your competitors will face the same increase and will also have to put their prices up?

 

[treeturner123]

I don't use the post often except at Christmas. I have two worries though

Firstly as a stamp collector, I do buy and sell on you-know-what so the charges will be going up. Also, I have given up on modern GB stamps as they have so many issues a year now, many are either very 'Woke' or re-issues of anniversaries commemorated in stamp form in previous years!

Secondly, and more pressing, who will be paying for the almighty cock-up over the computer system debacle? The former Sub PostPeople are still not getting what they have been awarded, the CEO in charge at the time has made herself a mint with no comeback and the computer company have not been called to account even though it is clear they were well aware of the deficiencies which they covered up!!

I would also take issue with the privatisation no good issue. Does no one remember when the Publicly Owned GPO also installed telephones? My father was a consultant in Birmingham in the early 1960's and had to wait nearly 1 year to have a private rather than a party line even though he was often called out on emergencies in the evenings and at weekends. Often the real issue is as much the practices that grew up in public bodies with over-strong unionisation which are hard to change with the changing way of modern working.

 

[stuart little]

What if China took over RM - considering their prices!!?

 

[Sideways]

I looked at the pad o vac website.
Clever idea. I can see why the automotive types like it. But free postage on all orders just isn't viable.
Take a few weeks and analyse your sales.
Group them into (say)
£0-5, £5-10, £10-20, £20-50, £50+
In each category, how many do you get, what is the total value of those size orders, what contribution are they making to your business (sales value less the cost of the product, packaging and postage)
Then count the time you spend assembling and posting out each size of order and assign a value to your time.

I'll bet when you do this, you find you are making little profit, or even a loss, on the very small orders.
It's universal in business. There is a minimum size that just isn't economical.
1. Change your policy first to free postage on orders over (say) £20 and add postage charge at cost below that.
2. Then consider setting a minimum order value, but there's probably no need if you do 1.

You will say "but if I charge for post on small orders, I'll lose business"
You will, but I bet not much, and if your sales £ go down, the profit won't go down as much. You may even get some of your time back not messing about with onesies and twosies....
HTH

 

[Cobbs]

I don’t understand why this is the death knell for your business. Surely it’s a level playing field as your competitors will face the same increase and will also have to put their prices up?

As I mentioned earlier, the only collection option I have is Royal Mail. The majority of similar businesses are based in towns, where they have plenty of options for collection, but Evri and their ilk will not collect from me unless I send far more packets than I do now. Maybe I have overstated the ills, but it's fair to say that it will make life one hell of a lot harder and my sales will drop.

 

[Cobbs]

I looked at the pad o vac website.
Clever idea. I can see why the automotive types like it. But free postage on all orders just isn't viable.
Take a few weeks and analyse your sales.
Group them into (say)
£0-5, £5-10, £10-20, £20-50, £50+
In each category, how many do you get, what is the total value of those size orders, what contribution are they making to your business (sales value less the cost of the product, packaging and postage)
Then count the time you spend assembling and posting out each size of order and assign a value to your time.

I'll bet when you do this, you find you are making little profit, or even a loss, on the very small orders.
It's universal in business. There is a minimum size that just isn't economical.
1. Change your policy first to free postage on orders over (say) £20 and add postage charge at cost below that.
2. Then consider setting a minimum order value, but there's probably no need if you do 1.

You will say "but if I charge for post on small orders, I'll lose business"
You will, but I bet not much, and if your sales £ go down, the profit won't go down as much. You may even get some of your time back not messing about with onesies and twosies....
HTH

You talk a great deal of sense - thank you, I'll be having a look at everything over the next few days.

The "clever idea" bit, do you mean the tool? As far as I'm aware, I've never sold one of those to a car detailer, but they do love the abrasives! The tool was for faceplate turners.