Fundraising News: Size-based pricing given post regulator approval

Royal Mail has received the go-ahead from its regulator, Postcomm, to charge postage according to the size of a letter or parcel as well as its weight.

Although this means many charities will be forced to pay more for their direct mail, they have at least been given more time to prepare: the new pricing structure will not come into force until August 2006 - four months later than the previously expected April start.

The Institute of Fundraising has welcomed the postponement. Laura Thomas, policy and standards officer at the institute, said: "We were very worried that many charities would not have had time to adapt to the new pricing structure before the scheme comes into play."

She urged organisations that rely on direct mail to raise funds to familiarise themselves with the new pricing structures and use the next 11 months wisely by testing new packs and preparing for the changes.

Charities that send pens in their direct mail packs, using the Royal Mail's Mailsort 3 pricing package for bulk mailshots, are set to be hit hardest. In these cases, mailings of less than 50,000 will cost 3.75p more per letter. Those between 50,000 and 100,000 will cost an extra 2.8p per letter.

In order to soften the blow, the Royal Mail has come up with a "mitigation proposal". This would see compensation offered to charities that have an annual postal bill of more than £100,000 and whose postal costs will increase by more than 50 per cent as a result of the changes.

Thomas is nevertheless disappointed. She said: "As it stands, the majority of charities will not qualify for any financial support because their expenditure is seen as too low. However, many charities might have to incur additional design costs in producing packs that fit with the new structure."

Robert Mayes, group communications director at direct marketing agency WWAV Rapp Collins, said the Royal Mail had not done enough to alert its business customers, including charities, about the changes.

He said: "Many organisations don't realise what is happening - there is a huge awareness problem."

A spokesman for the Royal Mail said the introduction of size-based pricing was intended to make the postage system as a whole "more fair and flexible".

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