Competition Induces Pricing Change At Royal Mail

Lynne Kiesling

I’ve been having a bout of insomnia lately, so I was awake way too early Thursday morning. When that happens, I listen to BBC Radio 4 to catch the late morning and midday commentary shows. One of them on Thursday had an extensive interview with Lorna Clarkson from the Royal Mail, in which she discussed how Royal Mail is changing its pricing. Historically charged by weight, now the Royal Mail will charge by size of package, which more accurately reflects the costs they incur of handling and directing the package.

What is prompting this change? As of January 2006, Royal Mail ceases to be a monopoly, even for first class mail, and will face competition throughout its traditional service range.

Over at the Adam Smith Institute, Brian Micklethwait comments on this change:

Could there possibly be a more perfect illustration of the benefits of opening up a market to competition? For decade after decade, the post office has been working inefficiently, without anyone really knowing this, because the prices it charged for its services inaccurately reflected the different amounts of bother it went to for different packages. We postal customers gave less thought than we might have to using the postal service efficiently. This was not our fault. It was simply that we were not being told, by the prices we were being charged.

Examples like this just make me feel all warm and fuzzy inside.