Sage has come under fire from AccountingWEB members for increasing the price of its hosted application by 56%.
Sage 50 Accounts Hosted does what it says on the tin. In contrast to the much simpler Sage One, Sage 50 Accounts Hosted is based on the current version of the developer’s flagship desktop accounting application and is marketed through the Sage Accountants’ Club and the company’s usual business partners.
However a recent Any Answers post from Logika highlighted disquiet about a recent increase from £75 a month to £117 (plus VAT). Unfortunately for the AccountingWEB member, the rise was not shown immediately on Sage’s website and the firm had quoted the lower £75 pricing to a client. Sage agreed to honour the lower price months, but said it would go up to £117 (plus any further 2013 increases) in 12 months.
“Unsurprisingly our client has decided not to proceed,” commented Logika. “How can accountants confidently sign up clients to Sage Online if they know that they will be putting their clients at the mercy of Sage’s pricing policy.... 56% in one year can never be fair or reasonable even with a major upgrade.”
While Logika had nothing but praise for the software itself, another aspect of Sage’s pricing was an irritant: practitioners buy the software through the accountants’ club and are invoiced £1400, less the 20% club discount, £1,344. The client pays Sage £116 (+VAT) a month by direct debit, with the amounts credited to the accountant, leading to a 20% credit at the end of the year.
“Sounds good but the catch is that if the client cancels or stops paying the direct debit then you become liable to Sage for the remaining balance. Join Sage Accountants Club and end up personally guaranteeing your client's debts!” lamented Logika.
Mark Duncan, product manager for Sage 50 Accounts Hosted, came on to the site to answer Logika’s complaints.
The wrong web price has been fixed and Duncan explained that the increase was designed to set a similar cost of ownership for Sage 50 Hosted as for the Sage 50 Accounts Professional edition with full SageCover. The cost of ownership had been calculated over a three year period of use, and during the first year the hosted approach would work out cheaper, Duncan said later.
The price increase was the first since the service was introduced in late 2006 and reflected investment in the underlying hosting infrastructure and a shift to the latest version, Sage 50 Accounts Professional 2012.
Those customers wanting a less fully featured application still had the option of the £5 a month Sage One cloud system, he said.
Once the new infrastructure and pricing model has been in place for a few months, Duncan promised that Sage would take feedback from and customers and make any necessary adjustments. “Partners do feel strongly about bearing the liability if a client cancels. We will definitely be looking at it, but I can’t promise at the moment if we will do anything,” Duncan told AccountingWEB.
But Logika was not convinced by the consistency of Sage’s hosted and desktop pricing models. “The standalone is a one-off purchase, hosted is a monthly commitment so is much more expensive long term.”
If Sage was serious about the hosting market, Logika suggested an alternative strategy to encourage take up, based on:
- £70 per month payable by client to Sage
- Fixed pricing for 3 years
- Monthly credit to accountants account of £14 per month.
Other AccountingWEB members were less charitable about Sage’s online strategy, contrasting the £117 monthly rate for Sage 50 Hosted to charges for pure cloud accounting applications such as Xero and KashFlow.
“Both are under £20 per month with no contract and the client pays directly so no risk of you picking up the debt,” commented Dreamcatcher.
Adrian Pearson added that the number of clients he was picking up for his Movemybooks Sage-to-Xero conversion service indicated the extent to which Sage was losing small business customers to newer rivals.
Watching from the sidelines was Online50, which has been offering hosted versions of Sage 50 since 2003. Although the third party hosting provider has had its own ups and downs with Sage, managing director Rob Lambden took a pragmatic view of the latest increase, which will not affect his clients.
“Sage own the software and can charge what it wants for it. People don’t have to buy it,” Lamden said.
The best way to keep prices down was to provide a good service and grow the customer base, and Lambden thought Sage’s latest increase would generate enough revenue to fund the underlying infrastructure and new developments at a realistic level.
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John Stokdyk sadly passed away in June 2023. He had been with the site since 1999, rising from news editor to editor in chief, global editor and head of insight. As a roving editor, he investigated the profession's use of technology around the world. He devoted his spare time to technology history and an oddball collection of stringed...