How often have you heard the cry that postage costs are postage costs and that’s what you have to pay? Well, that’s where many people considering using direct mail are going wrong. Since the removal of Royal Mail’s monopoly on postal services, postage has become a commodity affected by market forces.
Other companies have come into the market place and offer postal services. Not all companies offer the same type of service and in the early days, many of the new entrants – Down Stream Access (DSA) providers – picked off the profitable work leaving Royal Mail to fulfill its obligation to deliver to all households in the UK which is clearly not a very profitable pastime.
Although it’s not always cut and dried, generally Royal Mail offers the cheapest service if you are content with a 4 day delivery service. A fairly new product called Advertising Mail also gives significant discounts on postage, though there are strict parameters. The mailing needs to be ‘advertising material’ and the data (names and addresses) must be clean, which is harder than it sounds. The database must be run through a software programme to check it matches Royal Mail standards. This programme is expensive, so is not economic for individual companies to own.
Since April 2012, VAT has further muddied the waters when calculating the cost of postage. Before April 2012, there was no VAT on postage and so businesses which could not reclaim VAT benefitted from purchasing postage without having to pay VAT. However, in line with the government’s objective to level the playing field with the DSA providers, VAT is now applied to most postage services. This has had a serious financial implication for those organizations not VAT registered such as charities and small businesses.
Key points to note
1. Small numbers of mail? You may be able to benefit from a NRG price of 29p plus VAT for a second class stamp using one of our DSA providers.
2. Unable to reclaim the VAT? We provide a service which is VAT exempt and costs just 33p for second class letters. Saving 34%
3. Larger quantity runs? Postage savings are considerable and often your saving will pay for us to pack the mailing. Leaving your staff available for other income-producing activity. The reason we get the postage discount is because we do part of Royal Mail’s work for them; it is called a workshare scheme. Speak to us for more advice.
Postage is no longer straightforward!
The price of your stamp is affected by lots of factors including:
• Content of material
• Quality of data
• Geographical spread
To make sure you get the best postage price, you should talk to someone independent with knowledge of the industry, who is keen to supply the best price at the right quality and with an excellent level of customer service.
For advice or more information please talk to the 2 Kellys at NRG on 01743 454888.