Royal Mail now only compensates cost price for businesses, is that allowed?

McFlipflop

I am a potter, I send all my work with Royal Mail. On rare occasions the work is broken in transit or the parcel goes missing, so I usually place a claim online, show proof of postage cost and the item value and they compensate me accordingly. However, they now say this:

I am sorry we are unable to review your claim due to a problem with the information submitted. To enable us to assess your claim, we need you to supply supporting evidence, as all compensation claims must be supported by the following: • Proof of cost price must be a purchase invoice or receipt stating how much the item originally cost to acquire – as you’re a business seller we’ll only compensate for cost price and not sale price. 

When considering payments we need our customers to provide us with evidence of an original certificate of posting and documented evidence of the items value. As a business, we request proof of cost price to ensure we’re compensating all businesses in the same way. If you can provide a detailed breakdown of the actual cost, along with the evidence of this such invoices and receipts I can reassess your claim.

As a potter, the value of my work is in the time it takes me to create them, not in the cost of the clay etc. Can this really be allowed? I have made the this point to them but they insist I send them invoice copies. Any help much appreciated.

pinkshoes

Well surely the "cost" price is your materials plus the hourly rate of the time you took to make it?

So you do as they ask and send them a detailed breakdown of the actual cost.

e.g. 600 g clay £7, 3 hours of labour @£30/hour = £90, total cost price £97. (no idea what clay or materials cost, but I'm assuming you have an hourly rate you use to do your costings??)

Exodi

In my experience, this has been the status quo with all couriers we've ever worked with.

pinkshoes 

Well surely the "cost" price is your materials plus the hourly rate of the time you took to make it?

Unfortunately that doesn't wash with them (else they'll inevitably find the 'labour' element just happens to always be the difference between the cost and their maximum compensation limit).

It sucks as for a normal product it means you lose out on the 'profit' from the customer, but then generally you can send them a replacement so you're not down or up compared to if the parcel wasn't lost.

The OP is unfortunate in the sense that their product is particularly vulnerable to this mechanism, as their product cost is significantly overweighted on labour.

sonearandyetsofa

I would try for that anyway, your cost price is materials + labour + electricity + anything else used in the construction. Alternatively will they accept a claim for a replacement value? And you can source something similar elsewhere.

If they don't, and it really is materials only, I would strongly suggest you get your own goods in transit insurance in the future and don't bother with the parcel company's insurance as it's clearly not worth very much.

Okell

Unless you are only doing this business as a "hobby" and you don't know or don't even care whether you are making money or not, surely you must know what your costs (including your time) are?

Do you keep no business accounts at all?

If you are a business then RM can impose whatever T&Cs they like. It's up to you if you accept them by using their services.

If you aren't a business but you're a consumer, their terms might be unfair and therefore unlawful

Again if you are a business you might have to purchase insurance to cover this risk and the cost of that insurance becomes a part of your business costs

Grumpy_chap

for a normal product it means you lose out on the 'profit' from the customer, but then generally you can send them a replacement so you're not down or up compared to if the parcel wasn't lost

Well, even a "normal" product has some labour or other cost / risk / processing element to create the "added value" which becomes the profit. Otherwise the customer would just buy from the supplier

sheramber

It has always been the case that if you sent a crafted item e.g. a knitted item, you only got recompense for the cost of the wool, and had to show an invoice for the cost.

michael1234

So lets imagine you're a carpenter and you spend a full week on making a little bespoke coffee table from some oak you obtained for free from a tree surgeon. You sell the furniture piece for several hundred pounds. Royal Mail say in all their adverts that some of their services cover loss or damage. And yet you'd receive nothing.

It is indeed surprising that they can get away with such misleading advertising.

McFlipflop

https://forums.moneysavingexpert.com/discussion/comment/81950056#Comment_81950056

Exactly, this is a great example and highlights why it surely can't be correct.

McFlipflop

https://forums.moneysavingexpert.com/discussion/comment/81949926#Comment_81949926

Thanks, I think I'll do this and see how it goes.

McFlipflop

https://forums.moneysavingexpert.com/discussion/comment/81949987#Comment_81949987

I am a business and I do of course have accounts and know my costs but I don't have invoices for my time.

Also, regarding accepting their T&Cs, they are hard to find and to decipher. For example I found this in their terms for claims which I have quoted back to them: "any claim for compensation for actual loss will be paid up to the market value"  and yet they still come asking me for cost price proof. Most couriers don't cover ceramics as at all.