Rocketing stamp prices to hit direct mail firms

Businesses expect to be hit hard by a sharp increase in the price of first and second class stamps announced by the Royal Mail.

The price of a first class stamp is going up by 14p to 60p from April 30, while a second class stamp will also rise by 14p to 50p. Large letters will cost 90p instead of 75p to post first class from next month, while the cost for second class large letters will rise to 69p from 58p.

Royal Mail, which had been granted the freedom to set its own prices by the regulator Ofcom, said second class stamps would remain among the cheapest in Europe, while first class stamps would be around average.

The increase in postal prices comes as particularly bad news for direct mail companies, which rely on traditional delivery methods to reach potential customers.

Serious Readers marketing manager Richard Read said: “It is very disappointing to hear the announcement from Royal Mail of significant price increases again this April – this of course is on top of the increases that were imposed 12 months earlier.

“Last year’s price increases cost Serious Readers about £20,000 and for 2012/13 we estimate they will hit the bottom line by a further £30,000.

“Serious Readers is principally a direct mail company and have for years relied on traditional off-line marketing activity to drive our growth and sales.”

Read said postage is now forecast to account for 30 per cent of the firm’s marketing budget for 2012/13, compared to the 28 per cent of the budget it had accounted for in the previous year.

Online marketing is now becoming more attractive to the firm, he added.

“At a time when many companies are feeling the pinch it is extremely damaging to the economy for a monopoly like Royal Mail to have the power to increase its prices significantly above inflation,” he said. “If this continues to be the agenda to pave the way for privatisation, then as customers of Royal Mail we can only hope that other suppliers enter the market sooner rather than later.”

The number of letters posted has dropped dramatically in recent years, from 84 million a day six years ago to 59 million today.

Moya Greene, chief executive of Royal Mail, said: “We know how hard it is for households and businesses when our economy is as tough as it is now. No-one likes to raise prices in the current economic climate but, regretfully, we have no option.”