If you ran a company that was losing its market share to a rival technology that was faster and essentially free, would you:

a) Reduce costs where possible, improve services, and advertise your unique selling proposition – so that you were a viable and credible alternative?

b) Dramatically increase costs and delivery times – while at the same time making your service more complicated and difficult to use?

Well, Royal Mail has gone for the second option.

The price of a 1st class stamp went up in May to a record 60p – I didn’t even notice, as the only smart thing they have done is to take the price off the stamp, and label it 1st instead.

Royal Mail explains

“No-one likes to pay more and we regret having had to take these tough decisions on pricing. After these increases, we will continue providing value for money as our prices will still be among the lowest in Europe.”

“We are investing heavily to modernise our operations, which is all about providing our customers with the services they need in today’s open, highly competitive postal marketplace.”

Moya Greene, Royal Mail

I have a few issues with this statement.

Firstly, I really can’t see how paying 60p to maybe get a small letter delivered at some time the next day in the UK, is value for money.

Secondly, “lowest in prices in Europe?” In Germany, it’s 39p to send a letter – without all the Royal Mail’s complicated size restrictions.

And thirdly “a highly competitive marketplace?” – they have a virtual monopoly on letters for non-business users. I have no idea how I would post a letter with anyone else, do you?

Weights and measures – more expensive and complicated

Before, your postal charge went by weight – this was simple and easy to understand.

So to make it more difficult to use their service, they also added limits on the dimensions too. Now your package can be no longer than 240mm, wider than 165mm or thicker than 5mm.

Confused? Not sure if your package will make it? Then you have to go to the Post Office, stand in a queue for 15 minutes to find out.

Royal Mail stamp prices 2000 – 2012

To put the folly of Royal Mail’s decisions into context, you have to consider that they made this move at a time when over 60% of the UK has internet access at home, the recent proliferation of smart phones, laptops and free wi-fi access.

Increased bandwidth and broadband speeds also allows users to send huge movie or picture files to their friends, instantly and conveniently. And although it is not legally binding as yet (compared to post or fax), businesses are routinely using email for invoicing, receipts and contracts.

Then there’s the all pervasive social networking sites, which seem to be the communication medium of choice for the generation that’s growing up. What are they going to be like when they are the business managers of the future?

Royal Mail pretty much has a unique product, and a monopoly for standard post. But cost is a key factor in anyone’s decision making process and I don’t think they are just pricing themselves out of the market, but out of existence.