POSTAL WORKSHOP - SEPTEMBER 2015
1. Workshop Theme: Economic Models for determining costs and setting
prices for Postal Services
2. Background and Concept
Generally, the Postal Sector in SADC has viability challenges because of a host of
operational factors stemming mainly from increased competition and
technological substitution of postal goods and services. One such albatross
weighing down on viability is the high fixed cost structures synonymous with most
Designated Postal Operators (DPOs) in the region. The situation is not helped in any
way by the apparent lack of cost and price transparency that characterizes the
Sector.
A survey carried out by CRASA revealed the existence of models for costing and
setting prices in 60% of the respondent member countries. The models are mostly,
cost based plus tariff, activity based costing and absorption costing used for
determining costs and prices for reserved postal services. The survey also revealed
that prices for unreserved postal services are left to the vagaries of market forces
in most of the countries.
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However, some challenges faced in setting prices for reserved services were
highlighted as follows:
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Costing model not being fully appreciated and understood.
Consideration of affordability to the whole population.
Formalizing the reserved area concept.
Price falling short of covering operating costs – price determined by
Government/Regulator.
 Current price being a major determinant factor in price reviews.
This workshop seeks to come up with recommendations for economic models and
guidelines for the determination of costs and setting prices for postal goods and
services in SADC taking into consideration current market dynamics. The workshop
also seeks to identify appropriate regulatory interventions and best practice that
would enhance costing and pricing of postal services.
3. Workshop Deliverables
3.1. Recommendations for economic models and guidelines for the
determination of costs and setting prices for postal goods and services.
3.2. Review and benchmark existing costing models for reserved postal
services in such a way that they promote affordability while ensuring the
sustainable provision of Universal Postal Services.
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