David Brackin is the managing director of Stuff U Sell, the leading eBay trading assistant in the UK and a regular Tamebay contributor. Today David looks at the recently announced Linnworks pricing plans from a week ago and the latest updates announced.
Linnworks yesterday announced an update to its new pricing plans saying that if customers didn’t like the new proposed plans they could stick with the old user-based plans and furthermore the company would promise not to increase prices for two years and by no more than 20% in the third year.
My business, Stuff U Sell, has been a Linnworks customer for a number of years now and we have trained our team how to navigate and use it and we have built much of our automated infrastructure on top of the platform. To do this requires a very high level of trust that the platform is going to be reliable and consistent over time – both from a technical and economic standpoint. So it was a concern to see the way the most recent pricing changes unfurled this past week. However, the way in which this has now been addressed has restored my confidence. We all buy technology on much more than price and this week has highlighted that more than most.
I became aware of the proposed pricing changes last week through an email asking if I’d seen the announcement. As it happened, I hadn’t, and it was buried in my customer services spam folder. By the time I’d read it, I’d already seen many members of the Linnworks community posting angrily about sharp increases in fees (upto 10x and higher) online on Tamebay and in other places: I was expecting the worst.
In fact, mostly I was confused. I couldn’t figure out what we were supposed to be paying or which tariff was going to be best. I didn’t understand all the terms of the new order-based charging (do cancelled orders count?) and with SKU limits and bundled allowances, I suddenly felt like I was choosing a mobile phone contract again. The soonest I could schedule the suggested support call was a week away, so I called Callum Campbell, the relatively new CEO to ask him.
He explained that the trouble with pricing software is that nearly all of your costs are fixed – developers and support teams are expensive compared with machines and bandwidth so each additional customer costs very little to serve, but they all have to pay for the whole show (the same is true of mobile phone networks!). So pricing tends to be done based on the value of the software vs an alternative. If you have just a few orders you might employ someone to do it by hand. If you have thousands, then you are seeing real advantages to using software to do the job.
This makes real sense – but wasn’t it just a massive increase in revenues across the board? Callum assured me it was not – for every user shouting about an increase there were others who were seeing decreases. Indeed when he went through our pricing, it looked like we fell between two schemes, but it was likely that we would pay slightly less under the new scheme.
The online debate backed up what he said – there were users paying a few hundred pounds to support sales of 30,000+ orders. By any scale that is pretty cheap – and some commenters were urging a cool assessment of the benefits of Linnworks: the reason that most users have ended up there is seeking a reliable tool that works rather than simply a cheap one. Indeed as I contemplated the offerings, I realised I would rather opt for the higher priced scheme (+60% vs -10%) if I had a promise of future price and technical stability and improved support, and said as much to Callum.
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“I must hold my hand up and say that we mishandled the introduction of this important step for Linnworks. It was done for the right reasons and in the long-term interests of our customers, but short-term, we didn’t take enough account of our customers’ differing business situations and needs. We need to listen more and understand you better.”
– Callum Campbell – CEO, Linnworks
However, no matter whether this new scheme was “fairer” in some sense, there were clearly winners and losers and the shock of the announcement and stress of trying to find out if our businesses were no longer viable was not well received in the community. I suspect the scale of this response was a surprise to Linnworks. It is to their credit, then, that they have softened the impact of the changes by allowing users to stay on the old pricing scheme, and furthermore have given a promise about prices in the future so they can build their businesses on the platform. If they are smart about it, then this may help them to engage the community further to help figure out where the pain is in using their software and make it more valuable to their customers.
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