Up they go again – Royal Mail to hike second class stamp prices in April

Up they go again – Royal Mail to hike second class stamp prices in April

Royal Mail has announced that from 2nd April 2024, they will be raising the price of second-class stamps again. From the current price of 75p, they will be moving it up to 85p, a rise of 13%, as well as increasing first class stamps from £1.25 to £1.35, an 8% rise. Interestingly, the rate for second-class large letters remains unchanged at £1.55, but the first-class equivalent will now be a whopping £2.10.

It seems that Royal Mail is stuck between a rock and a hard place, with criticism online about the decision to raise prices yet again. In truth, however, they are in an impossible position. Mail volumes are declining, down from 20 million letters just a few years ago to just 7 million in 2023. That means a more than halving of revenue and sitting above this is the need to meet the terms of the Universal Service Obligation, meaning letters must be delivered to all parts of the country six days a week and within specified timeframes.

Critics shout loudly about the declining service levels and the decision to raise prices in an already declining market, pointing out that in any other industry, a firm in this position would be lowering prices to encourage more usage. But they miss the point, which is that the practice of letter writing has been in decline for many years, with email and messaging apps now taking the place of letters. Much like printed business directories disappearing with the rise of the internet, letters appear to be going the same way.

So, if you were faced with the problem of declining usage through substitution and an obligation to retain all your fixed infrastructure to meet a six day delivery mandate, even if it’s not really required anymore, what would you do?

QEII second class stamps with matrix

Royal Mail has pivoted to be primarily a parcel delivery company now as a way to generate revenues as letter volumes decline, but perhaps they are missing a trick. As the volume of letters declines, why not reduce the price of postage stamps? From all we have seen, stamp revenues continue to decline and as such, would be a much smaller part of the overall revenue pot. As this happens, the pricing of this service will become less relevant, as when expressed as a percentage of total revenues it will be quite small. Raising the cost of parcels very slightly would easily offset any revenue loss at the lower end which means that this is a massive marketing opportunity that should not be ignored.

Despite the competition Royal Mail faces from other parcel firms, they still hold sway over a large part of the U.K. delivery market and as such, can consider every marketing option available. No one is expecting them to cut the price of posting a letter, but why not? Reframing letter writing and sending would be a great Marketing challenge and numerous brilliant young marketers would jump at the chance to do this. So come on Royal Mail, do something unexpected and see this not as an existential challenge but an opportunity to do something good. Next time you are looking at postage stamp prices, at least put the option of reducing the cost on the table.

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