Zonal pricing

Zonal pricing is a pricing structure whereby customers are charged different rates for their postal items according to delivery destination.  The concept is designed to maintain the average national price at its current level (so average prices are unchanged) but individual destination prices could increase or decrease to reflect variations in delivery cost between areas.

Royal Mail made a final application to Postcomm in July 2007 to apply a zonal pricing structure to its retail bulk mail products with the notable exception of Mailsort 1400 1st and 2nd Class. The proposed changes covered the following products which are outside the universal service obligation:

• Mailsort 120 1st, 2nd and 3rd Class,
• Mailsort 700 1st, 2nd and 3rd Class,
• Presstream 1st and 2nd Class,
• Walksort 1st and 2nd Class and
• Mailsort 1400 3rd Class

The proposals did NOT affect stamped mail or the franked mail posted by many business customers.

On 17th August 2007, Postcomm published its proposal to reject our retail Zonal pricing application.  Royal Mail responded to this decision by seeking a judicial review – see the document library below for a presentation of our legal and economic arguments. However, this action has now been withdrawn following an agreement between RM Wholesale and Postcomm to introduce a new 4 zone pricing structure for Access products.

Royal Mail is now reviewing its options regarding zonal retail pricing. It has no immediate plans to make another application to Postcomm to introduce the scheme.

To help you explain zonal pricing to customers, a one page summary and client presentation are available below under general information.