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ppa pricing in proportion workshop 9 june 2006 n.
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PPA Pricing in Proportion Workshop 9 June 2006 PowerPoint Presentation
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PPA Pricing in Proportion Workshop 9 June 2006

PPA Pricing in Proportion Workshop 9 June 2006

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PPA Pricing in Proportion Workshop 9 June 2006

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  1. PPA Pricing in Proportion Workshop9 June 2006

  2. Agenda • An Introduction to Pricing in Proportion and the team • Testing your PiPability • PiP and Magazines • PiP and Direct Mail • A comparision of business prices • Mixed weight mailings • E-pro and line listings • Comms Plan and the PiP Results

  3. Setting the context What is PIP? When is it? How does it fit into Royal Mail’s vision and strategy? Why is it important? How does PIP compare with other postal companies?

  4. When will it happen? Monday 21st August 2006

  5. 02/03 04/05 06/07 07/08 A journey with a destination Business Renewal Customer Renewal Fully competitive market

  6. Product Roadmap Pricing Roadmap Solutions Roadmap Easy to do business with Roadmap its renewal plan 2001/02 Business Renewal 2004/05 2005/06 Customer Renewal Onwards

  7. What today is about… • Getting to grips with the PiP basics • Understanding the latest updates on the detail • Getting familiar with weight, size and formats • Knowing instinctively the impact on your mailings • Interactive session • Support for technical questions • Having ‘a bit of fun’

  8. PiP – what is it? • A rebalancing of the prices for mail services to take account of size as well as weight. This will bring its prices into proportion with its costs. PiP – why do it? • Current pricing does not reflect costs • Getting fit for competition • A fairer system for pricing mail – cost reflective pricing reduces the level of cross subsidisation

  9. Which services will be affected? • Services affected are: • First & Second Class (Stamps / PPI / Meters / Response Services) • Packetpost • Packetsort 8 and Flatsort 8 • Mailsort 1400 and Flatsort 1400 • Presstream, Walksort, Mailsort 120 and 700 • Mail Media • Door to Door will take an element of PiP format into account • Cleanmail, Mailsort 120, Mailsort 700 (only prices are affected) • Services currently not affected are: • Special Delivery • Items weighing over 1kg • Services being considered: International Public Tariff

  10. Move from weight to format..definitions & structure Maximum thickness Proposed new size Weight Content would include 0-100g 0 - 100g101 250g251 - 750g* 0 - 100g101 250g251 - 1000g* 0 - 100g101 - 250g251 - 750g* Letter Size not to exceed 240mm x 165mm (This size is larger than A5, half a sheet of standard paper). Large Letter Size not to exceed 353mm x 250mm This size is larger than A4, a standard sheet of paper). Packet Any item which is more than 25mm thick or longer than 353mm or wider than 250mm or heavier than 750g. A3 Packet (For business contract customers use only) Size not to exceed 420mm x 297mm x 25mm thick. 5mm 25mm 25mm Most letters, postcards, bills and statements, some brochures and catalogues, most birthday cards. Large letters (containing unfolded sheets of standard paper). Most brochures, catalogues and company reports, some magazines. CDs and DVDs. Most larger birthday cards. Most magazines. *Straight line pricing for each 1g above 251g VHS cassettes, books, some magazines and catalogues, parts and samples, prints and posters in large or cylindrical packaging *Straight line pricing for each 1g above 251g Magazine distribution and oversize DM mailings *Straight line pricing for each 1g above 251g

  11. Magazines Presstream 1&2 Elizabeth Stock – Publishing Sales Development Manager

  12. How does PiP affect publishers? • Publishing is the only industry to benefit from a sector specific product and support (Presstream) • Introduction of A3 packet, 25mm and additional weight steps • Some magazine formats/weights will benefit from PIP • However others face an increase in price due to their size • Unlike other sectors, almost every magazine faces a significant price change

  13. Over297mm and /or and / or Over 25mmthick Over 420mm There are three formats for Presstream & Presstream Walksort Large Letter Packet A3 Packet Max 250mm Max 297mm Max 25mmthick Max 25mmthick Max 420mm Max 353mm Weight Bands 0 - 100g101 - 250g251 - 750g (in steps of 1g) Weight Bands 0 - 100g101 - 250g251 - 750g (in steps of 1g) Weight Bands 0 - 100g101 - 250g251 - 1000g (in steps of 1g) Max weight depends on service used

  14. Final prices

  15. Indicative PiP prices (Nov 05)

  16. Final prices

  17. Indicative prices (Nov 05)

  18. So what are the key impacts for publishers? • Some lighter weight magazines will see an increase in cost, this will affect some weekly magazines - mainly b2b publishers and A3 format. • Heavier magazines, mainly monthlies large letters will receive a reduction in cost • PIP A3 and Packet formats are more expensive than current prices • Profile discounts and the over 250k prices are not affected • A reduction in the Large Letter final prices (compared to April 06 tariff) at most weights, especially at the heavier weight. • Flimsy outer polywrap will be excluded from format measurements • Two weight-steps and straight line pricing from 250g

  19. Summary of changes to Mailsort 1400, Presstream & Walksort • Assumed average weights will be used for the 1st two Presstream weight steps • Mailsort 1400 Large Letter replaces Flatsort 1400 • Minimum entry posting levels are 4000 Letters (2000 if delivery is in same postcode area as presented to RM) or 1000 items for Large Letter, A3 Packet, Packet • No Letter format in Presstream & Presstream Walksort • Computer Planning Reports and line listings must include formats

  20. Summary of changes to Mailsort 1400, Presstream & Walksort • Size definition excludes plastic cover provided its flimsy and easily folded • Mixed formats will be subject to MV processes, the entire mailing will be liable at the largest format price. • Customers who intend to mix formats must declare the entire mailing at the largest format • Mixed weight mailings still permitted but require enhanced line listing • New Posting Cheque books must be used and bag labels must indicate format.

  21. CA81 – Posting Cheque

  22. Customer Final Label – Examples shown for Mailsort 1400

  23. Polywrap • Exclusion of polywrap from PiP dimensions only applies to Mailsort 1400, Presstream, Walksort, Packetpost and Packetsort 8 and Mailmedia • Exclusion is only given for plastic outer covers, provided they are flimsy (for example, plastic wraps that are 50 microns or less) and easily folded

  24. Inserts and covermounts • Inserts and covermounts are OK as long as they fit freely within the format dimensions • The word ‘freely’ is important…not forced! • Reasons for items not passing freely include • Too large or bulky for the slot • Items should not become damaged/ripped/torn or display signs of distress • If an item does not pass through the slot ‘freely’. It will be priced at the next format size

  25. Mail Verification process • Measuring devices used by RM staff will be • Polycarbonate templates certified by Weights and Measures • Micrometers will be used when necessary to check the 50 micron limit for polywrap • Cardboard templates readily available • Polycarbonate templates can be purchased from Avery Berkel Ltd for either £22.50 online or £25.00 +VAT • www.averyweigh-tronix.com/pip

  26. Direct Mail Mailsort 123 1400

  27. PIP impact direct mail Concern for customers and creative agencies is around impact on larger (“creative”) mailings

  28. Mailsort 1400 Large Letter Letter Max 250mm Max 240mm Max 5mmthick Max 25mmthick Max 165mm Max 353mm Weight Bands 0 - 100g101 - 250g251 - 750g (in steps of 1g) Weight Bands 0 - 100g

  29. Over297mm and /or and / or Over 25mmthick Over 420mm Mailsort 1400 Packet A3 Packet Max 297mm Max 25mmthick Max 420mm Weight Bands 0 - 100g101 - 250g251 - 750g (in steps of 1g) Weight Bands 0 - 100g101 - 250g251 - 1000g (in steps of 1g) Max weight depends on service used

  30. Final prices

  31. Indicative prices (Nov 05)

  32. Direct Mail • Majority of direct mail is Mailsort 3 1400 • Proposals leave scope for creativity eg. switching to winning formats • No penalties for square or unusual shapes if working within dimensions of chosen format • Opportunity to add pages, inserts etc. within new weight bands up to 250g • Straight lines re-introduced to smooth impacts of heavier items (large letter, A3 packet and packet go up in 1g steps after 250g) • MS120 & 700 still attract a better price, but must conform to mech. specification

  33. Key points to remember • Extra 40g at no additional cost for letters • Light Large letters are more expensive up to 70g. • Creativity within format will not be penalised • A3 packet format is cheaper than packet format

  34. Comparison of business services

  35. Comparison of services – 1st Class Calculated as directs with no profile price

  36. Comparison of services – 2nd Class

  37. Comparison of services – 2nd Class

  38. Any Questions?

  39. Mixed weight mailings – selective inserts

  40. Mixed Weight • Currently pricing 2 weight bands (Pre August) • Items weighing 0 – 60g = assumed weight 60g • Items weighing over 60g = actual weight • Where a mixed weight mailing contains items <61g then the average assumed weight is used for pricing • Under PiP same principle applies on assumed weight, but there are 3 weight bands • Items weighing 0 – 100g = assumed weight 100g • Items weighing 101 – 250g = assumed weight 250g • Items weighing over 250g = actual weight • Likely to impact on average assumed weight

  41. Mixed Weight - currently • Pricing on ‘Assumed’ Weight No. Items WeightActual WeightAssumed Weight 240g 80g 120g (2 at 60g) 2 160g 320g 320g 2 254g 508g 508g 6 460g 888g 948g Total Assumed Weight = 948g Average assumed weight = 948/6 = 158g MS3 Straight Line Price (158g) = 36.3p Total Mailing cost = 36.3p x 6 = 217.8p

  42. Mixed Weight – under PiP • Pricing on ‘Assumed’ Weight – Large Letter No. Items WeightActual WeightAssumed Weight 240g 80g 200g (2 at 100g) 2 160g 320g 500g (2 at 250g) 2 254g 508g 508g 6 460g 888g 1208g Total Assumed Weight = 1208g Average assumed weight = 1208/6 = 201.3g MS3 Large Letter Price 101 – 250g = 25.4p Total Mailing cost = 25.4p x 6 = 152.4p – saving 65.4p with PiP

  43. Mixed Weight – under PiP • Pricing on ‘Assumed’ Weight – Packet No. Items WeightActual WeightAssumed Weight 240g 80g 200g (2 at 100g) 2 160g 320g 500g (2 at 250g) 2 254g 508g 508g 6 460g 888g 1208g Total Assumed Weight = 1208g Average assumed weight = 1208/6 = 201.3g MS3 Packet Price 101 – 250g = 55.8p Total Mailing cost = 55.8p x 6 = 334.8p – an extra117p with PiP

  44. Mixed weight – currently and under PiP • ‘Actual’ v. ‘Assumed’ Weight; Remember • Royal Mail invoices on the Assumed Weight • Mailing Verification on the Actual Weight • Depending upon the mailing profile, some may increase in price or some may decrease in price • It is important that you and your mailing house/agent know how mixed weights are calculated when PiP comes in

  45. Standard line listing plus CPR for mail/format in the 0 – 100g weight band Standard line listing plus CPR for mail/format in the 101-250g weight band Standard line listing plus CPR for any mail/format that are all at a single weight Standard line listing XYZ Company Date 2 June 2005 Mailsort 1400 Large Letter Job Ref No J41*

  46. Enhanced line listing plus CPR required for mixed mail items >250g weight band Enhanced line listing plus CPR required for a mix of weight band mailings Enhanced line listing XYZ Company Date 2 June 2005 Mailsort 1400 Large Letter Job Ref No J41*

  47. E-pro Update

  48. Update for customers using E-pro • E-pro will be automatically updated on the 21st of August for the majority of users • Drop down fields will require you to enter the new formats to work the system • One month prior to PiP change tick–a-tape reminders will flash across the screen at user log-on stage • Some E-pro users who have imported their software need to ensure they have updated their system prior to 21/8 • Downloads and User Guides are available from Royal Mail • Epro Mail Processing Upload user guide v3.4 100406 & • Epro customer import interface specification v6.4 100406

  49. E-pro, Input Screen Changes

  50. E-pro, Input Screen Changes