E-commerce software provider Neto is facing an exodus of customers as confusion reigns about its plan to push through a price hike to stem losses.
In the days after SmartCompany detailed changes to Neto’s pricing structure, business owners have continued to take to social media to express outrage and research switching providers.
Neto is changing its pricing structure so customers are charged based on their annual revenue and will start billing in US Dollars rather than Australian Dollars.
It has claimed there will be a $360 cap on price increases for at least 12 months from the April 1 implementation date.
However, SmartCompany has been approached by several customers who say they’ve been told they will pay much more than that.
In an original email to clients notifying them of the changes on February 28, Neto chief executive Ryan Murtagh said discounts would be applied to clients to ensure they didn’t pay over the cap.
But it has since emerged Neto sent a number of different emails, some of which did not mention the discount.
In one email seen by SmartCompany, Neto told a client, who is turning over more than USD$1 million annually, their plan would increase from $499 a month to over USD$750 after a discount was applied.
Converted into Australian currency at current exchange rates, that equates to over $1,000, at least an AUD$500 increase.
In another email, a client was told, “we have reviewed your account and based on your last 12 months revenue you would be subject to a price increase of AU$2,304”.
Neto said it will apply a AU$1,944 discount to the customers account for the next 12 months to cap their increase.
The business maintained it will ensure a $360 cap is applied per store for all clients and is asking merchants who have been told they will have to pay more to contact them to have their plans corrected.
However multiple clients who say they went back to Neto for clarification say they have either yet to receive a response.
Meanwhile, dozens of confused customers have continued to take to social media to explore switching to new providers, despite being faced with the expensive task of switching their websites onto new systems.
Review pages for Neto services online, including Google reviews, have been bombed by angry business owners while competitors have begun openly pitching disgruntled clients.
As SmartCompany reported earlier this week, there are also business owners who plan to stay with Neto and have defended the business, saying their rates are still competitive.
However, others who have accepted the price increase have criticised Neto’s communication about the changes saying they’re still unsure what their bill will be in a months time.
“I didn’t know about the $360 cap when I was negotiating with them so I was at a big disadvantage to everyone else,” one client tells SmartCompany.
“We shouldn’t get distracted from the fact that even with a $360 cap this is still a massive price increase, $4320 of annual overhead increase is a massive amount for any small business to absorb.”
Wholesalers, who operate on higher volumes but with less margin, have expressed particular concern about the move to a revenue-based model as the new system would significantly affect their cost base.
The small business ombudsman is monitoring the situation after receiving two complaints in recent days, one of which was rescinded after the business owner decided to switch providers instead.
Murtagh has explained the increase as necessary to clients to “balance its costs”.
This article was updated at 3:30PM AEDT to clarify details about Neto’s client discounts.