Commissario
The price was IIRC worked out based on the fact that RM were when they were doing all the mail able to do it and break even/make a small profit.
The problem is that now RM are doing ALL the deliveries, and all the expensive parts of the mail collection/delivery, whilst the private companies can and do pick and choose what they want to do, and select the cheap parts to do themselves, then hand it over to RM paying the regulator approved amount for the final delivery.
As an example (figures made up)
Effectively say a stamp costs 40p
The collection of ALL the mail might have cost an average of 10p an item - with the likes of the village post box costing 30p a unit, whilst the likes of the Ibank contract 2p.
Postcom sets an average of say 10p because the huge amount of bulk mail covered the cost of the more expensive individual/smaller collections.
The sorting of the mail and delivery to the local sorting office for mail that is ALL the same shape, weight and size might have cost 5p, but the cost for more normal mail might have cost 10p, or 20p if the mail wasn't addressed clearly by computer...
Postcom sets the average at 10p per unit, as again that was an average per item of every item sorted.
The delivery cost in a town where the Postie only has to walk a few yards between houses might have only cost 5p an item, but in a more spread out town that might be 15p, or in a rural area it might even be 50p+ per item.
Postcom sets the average at 20p per item.
The way it's worked out now is that Privatepost LTD can bid on a contract for 10million items of mail a month from IBank PLC, and offer it at a cost of 30p per unit undercutting RM by 10p.
It costs them 7p per unit to deal with it because it's all nice uniform sizes from a single pick up point and all clearly and properly addressed.
They then pay RM 20p to deliver it keeping 3p per unit profit.
They can do this because they are only dealing with the easy/cheap items.
RM then have to not only deliver regardless of it it's in a town centre, or miles from the nearest sorting office with one house very 200 yards for that money.
Previously the average cost for the whole system (collection, sorting, delivery) meant that it worked out breaking even In theory).
Now the Privatepost LTD has effectively taken the "cheap" collections and sorting out of RM's hand, RM is left with the expensive collections, the expensive sorting and the deliveries.
I think the idea was that the private postal companies would do much more than they have, but without any obligations on them to do so they haven't, they've taken what was profitable for RM and left everything else for RM to do under the legal obligation RM has, but they don't.
Basically we the recipients and private customers of RM, and RM got screwed because the system wasn't thought out well.
At least that is my understanding from what i've read.