New PAF pricing policy is not a problem

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With the proposed part-privatisation of Royal Mail taking up most of the media comment recently, the advantages and disadvantages of an overhauled pricing structure have been overlooked. What comment we do read tends to be suspicious of the changes. If the Royal Mail claims that its total revenue will stay pretty much the same (which it does) then why are it bothering to overhaul the system at all? Is it truly because it wants to listen to their customers and data resellers, or is there some added benefit to them that they’re not letting on?

First, Royal Mail has seemed a little unsure of what its final pricing structure will look like. After years of consultation, the organisation still hasn’t quite made up its mind – and the September deadline is looming. But we do know a few things for sure ¬– it will favour transactional pricing. Pay-as-you-go or pay-per-click pricing will benefit from simpler licensing and price reductions while unlimited usage, organisation-wide multi-licence bundles will increase in price.

Royal Mail’s argument – and it seems a fairly sensible one to me – is that by opening the door to smaller users of PAF, it will free the data and make it far more accessible. In my opinion the new transactional licensing model will simplify licensing and give a more cost-effective solution for organisations with lots of smaller users.

Traditionally smaller users seem to feel neglected. Royal Mail’s ownership of PAF data has been questioned many times by smaller users who feel disenfranchised and unable to connect with the data juggernaut.

But many of the complainers fail to understand that PAF isn’t a static block of data – it’s a fluid and constantly changing resource. People are not only under the misapprehension that it never changes, they also seem to imagine that given enough enthusiastic people recording postcode areas against Easting and Northing measurements, an open-source PAF can be researched.

This is clearly not the case. Royal Mail really is custodian of the postcode data – and with one million updates every year across 28 million addresses, this custodian is here to stay.

So how does Royal Mail benefit from opening up PAF use to smaller organisations, other than receiving positive PR? Ultimately it’s going to lead to greater use of PAF, which will help Royal Mail massively in a number of ways as mail goes through the sorting process.

It’s worth remembering that up to 20 percent of mail has to be manually processed because sorting machines cannot read all addresses written on letters. This arises when addresses are either improperly postcoded, the handwriting is illegible or it is written using difficult to read ink, such as black ink on red paper.

As you can imagine, this adds a considerable cost to the mailing process. By opening up PAF and making it more useable, as well as simpler to manage, Royal Mail has made a very clever move. While it might not generate any extra revenue from selling PAF data, the organisation will cut costs by making the people more capable of intelligent address management. And the uptake will increase because address management is a business efficiency measure that pays dividends even in the short term.

It looks as if Royal Mail is committed to helping out smaller organisations with its new PAF pricing policy and in my opinion we would do well to support it.

Guy Mucklow is managing director of Postcode Anywhere, a Royal Mail PAF reseller and supplier of data-driven business efficiency tools.

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