The decision means that from September 2006 the cost of postage will depend on the size, shape and weight of the item in question. It is expected the changes will affect prices on around 30 per cent of business mail. For example, an A4 letter weighing no more than 100g sent 1st class currently costs between 30 and 46p. From September next year it is anticipated it will cost 42p.

“We need to be able to set our prices to cover our costs and to generate revenue to invest in our company and our people. A fair and flexible pricing system is key to Royal Mail being able to maintain the services on which we all depend,” said Lorna Clarkson, director of commercial policy and pricing at Royal Mail. Regulatory accounts show the company made a loss of £235m on stamped mail in 2004-05.

The Institute of Fundraising (Institute) has welcomed the news that the launch has been extended from its initial date of April 2006 to September. It had lobbied for an extension in order to give charities at least 12 months planning time to adapt to the changes. However, it has expressed its disappointment that the Royal Mail’s mitigation proposals will only provide financial support for organisations that spend more that £100,000 on mai,l and which see an increase of at least 50% in postal costs as a result of the changes.

To find out how the new pricing system will affect your postage bills, visit www.royalmail.com and follow the links to the Pricing in Proportion page.