Birmingham-based direct mail fulfilment and print management services provider, Baker Goodchild, has revealed that marketing agencies could be seriously affected by the recent announcement that Royal Mail intends to increase the price of both its first and second-class stamps from the end of this month. 

Earlier this month Royal Mail stated that from 31 March it intends to increase the price of a first-class stamp by 2p to 62p, whilst a second-class stamp will go up by 3p to 53p. In addition, a large letter first-class stamp will also rise by 3p to 93p and a large second class stamp will also increase by 4p to 73p.

Speaking about how marketing agencies will be affected by the price increase announcement, Baker Goodchild’s Mail Specialist, Account Director Adam Stafford, stated, “In a lot of cases post is already the single largest cost involved. So often, even after the printer and the agency have done their work, and we have done all our work filling the envelopes, the postage cost alone will dwarf the cost of what has come before.”

He continued, “Being the largest single cost, a postal price increase on an overall campaign is actually very significant, and obviously companies are always looking at ways to alleviate that, which is where we come in.

“Obviously there are alternatives to Royal Mail services, and we have access to various different discounts which can offset some of the increase, so they pay as little of the increase as possible.

Adam added, “Very often the discounts will depend on where the item is being sent to, how time sensitive it is, and obviously factors such as weight, size and the nature of what you are sending, how environmentally friendly it is, all of those factors play an important part and involve various different discounts. Obviously if you combine those elements together, the level of discount that becomes available, is quite a lot, especially when compared to stamps.

“There is also an additional benefit that by going on a discounted service, it becomes more reliable, and is often put on a bar-coded service, so there’s no sorting which means its less likely to be delayed.

“Our job as an expert, is to try and find the best deal for each specific mailing. The trouble for printers and marketing agencies more than anyone else is they are just passing that cost on, and it’s generally something they are not making margin on. In some cases they almost reluctantly pass that cost on, because what they really want is the print, the design and everything else that comes along with the campaign.

“It’s a cost that no one can avoid, like VAT! If you want to get something somewhere, at some point, Royal Mail is going to be involved in that. It’s important to make sure you are taking the most cost effective route when it comes to postal costs, in the same way that you would employ a tax advisor, in what to do with your money. That’s where we fit in when in terms of postage.

“Don’t get me wrong, Royal Mail are one of our biggest suppliers, and we have noticed they have got a lot sharper in a lot of areas, as a result of competition. But at the same time, you get what you pay for, but it doesn’t’ mean you to have to pay too much for what you are getting.

“Marketing agencies, being intermediaries, or as we would call them, ‘trade clients’, there’s no reason why they should not expect make a margin on the postage. It’s something we would like to educate people on. Sometimes people raise an eyebrow when they find out you can make a margin on the postage, but why shouldn’t you? It’s no different to selling paper! I wouldn’t expect an agency not to make a margin on the advertising space that they buy. Therefore I wouldn’t expect anyone to sell a product or a service, without making a margin. The beauty of what we provide, is that we can still show people how to make a margin out of the postage, with the client still saving money, and that’s the whole point of the process.

We can demonstrably save enough money, that there’s enough headroom for everyone to make a fair margin, because otherwise why would they want to do it?

“Effectively if you do postage without making a margin, then you are just lending somebody money! With zero interest. It’s pointless!

“It’s similar to the big conglomerates, who have a large buying power. It’s the same with us. Clients can take advantage of our buying power, which is in the millions, while there’s might not be. Quite simply it comes down to a combination of our expertise, and knowledge of the market, and our bulk buying power, which allows them to access much greater discounts than they would be able to access themselves. Even when you factor in margin from Royal Mail, or from an outside source such as downstream mailing, through to the printer, the client is still saving money, above what they would be able to achieve on their own. And that, at the end of the day, is the most important thing.

“It’s similar to the electricity tariffs. People don’t often know if they are paying the best rate. But by shopping around, and coming to an expert like ourselves, we can demonstrate that we can effectively save companies a lot of money when it comes to postage costs. Just by switching someone on to the right tariff, in quite a few cases, we can actually reduce their postage costs, even taking into the effect the price increases.

“So there is every reason to do it, and shop around and find an expert, and in turn, save money. You don’t have to accept the increase at the price they state, there are other options available.

“Three reasons why agencies should be looking at this. One, to maintain their competitive edge, secondly, they can make a margin, and thirdly, why shouldn’t they make a margin?

“There are a lot of agencies that we have worked with now for many years, who long-term, are making a margin on their postage, which has helped them to grow, and become more competitive, and in turn, make more money.

“In some cases we can save clients as much as up to 60%, and we all still make a margin. It can be as much as that. So printers and agencies need to be smart, shop around and in turn be more competitive. We can help.”

Based in the heart of Birmingham, close to the city centre, Baker Goodchild is a privately-owned company with over 19 years extensive experience in providing print, mail and postage solutions, throughout the UK and Internationally.

For all international mailing enquiries, contact Baker Goodchild’s International Mailing Specialist, Gareth Stringer, on T: 0800 612 1972.

For information on the services Baker Goodchild provides, please visit their website (www.bakergoodchild.co.uk) or call 0800 612 1972.