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Linnworks softens impact of new pricing plans

By David Brackin May 29, 2019 - 10:04 am

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.

Linnworks pricing options

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.

Thank you for your feedback

Callum Campbell CEO Linnworks“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.

  • Ifellow
    4 months ago

    20 per cent price increase after 2 years then, I think I’ll stay away not matter how many fan boys come out in support of this company.

  • 4 months ago

    The problem here for me is trust. Software such as Linnworks is utterly vital to your business and you need to trust the software and the company that provides it. The fact they have gotten this one so wrong is a real worry to me. Considering the amount of data they had access to it should not have been too hard to spot that a good number of their customers were going to see huge increases in their fees and that this would cause them a problem.

    Will they make the same mistakes when it comes to software design or server load or future developments ?

    Add to this what seems to be a slow down in their integrations development and a worrying trend whereby 3rd party developers create the integrations and then charge for them which leaves Linnworks thinking they no longer have to create those them for that channel/service. I think many customers would think, as I do that these integrations should be coming for free in their Linnworks subscriptions.

    I wont get started on .net and that the Open orders screen is still a very long way behind where it should be.

    Granted they have now pulled back from the brink and offered customers the option to stay as they were on pricing but only in response to a huge backlash. I will be staying with them for now but the trust had been rebuilt over the last couple of years following the last price debacle back in 2016 and the server issues in and around that time has now been eroded again and leaves me being a customer much more willing to take on the effort of changing to a new supplier.

    I guess we shall have to see how that plays out for them…

  • Chris
    4 months ago

    We looked at Linnworks a while back and the trouble IMO is that they are becoming the “Amazon” of the software marketplace.

    Although eBay was a revelation in itself, it was not until Amazon came along that online shopping took off. There might be many variations of Amazon now but we all say Amazon like we used to say Hoover, even if we had someone else’s vacuum cleaner.

    Linnworks in itself is the one stop shop for a lot of on line sellers but it isn’t fantastic and doesn’t cover everything that we needed. We chose to go with a smaller company (Nventree) to handle our order processing, and we have a separate accounting system that the Nventree data can be imported into in a very simple manner. The missing link for us is the label producing software – we still manually produce our labels for each order but that is our choice, not a restriction of the software. We prefer to have a manual view of each order so that we can spot any issues or anomalies as soon as possible and our customers appreciate the quick feedback that brings.

    When a relative giant in the marketplace – like Linnworks – is able to increase prices by such a large amount, it immediately sparks concerns and I remain pleased with our choices made. The concern has to be that their price manipulation team is sat together looking at a formula to extract the maximum possible set against the potential loss of customer base and if there is not much competition for the customers to move to, the loss will be minimal.

  • Mark
    4 months ago

    This is getting boring now. Tamebay is supposed to be impartial. This is the 2nd article written with a positive bias to protect advertising revenue.

    Thousands of accounts more than doubled, especially smaller sellers who can ill afford these massive price rises. You only have to look at the trust pilot reviews to see the trend of how many are losing and how many are winning.

    • 4 months ago

      Funny you didn’t accuse us of protecting advertising revenue a week ago when we published the price rise article which, with well over 100 comments, certainly didn’t do Linnworks any favours.

      We don’t make up the news, we just report what happens whether it’s good or bad and regardless if the company is an advertiser or not.

    • 4 months ago

      Without this News being reported by TameBay, these important changes would have most likely passed me by. Thanks for reporting.

  • Ali G
    4 months ago

    You called up Callum Campbell – CEO, Linnworks personally!?!?!?!?!
    Would you mind sharing his number so we can call him and ask him why they are making this change, when the service we all pay for is unstable, unreliable, bug infested system.
    Now they are back tracking after a mass of complains from customers, Linnworks and in particular Callum Campbell CEO has shown in the last week complete disregard for it loyal customers, and if I were a shareholder I would be asking why is this guy running Linnworks like this.
    How on earth can anyone budget on an order based payment system?

  • Chris
    4 months ago

    This is a seriously poor effort one what is clearly a desperate move from Linnworks. There is no way you have chosen to just write this piece in my view.

    Convenient when tamebay have the linn academy banner surrounding their site too.

  • 4 months ago

    We contacted Linnworks about 2 months ago. We spoke to them about joining went through a Demo. We were going to be paying £150pm.

    We said we would join once we move into our warehouse. Now that we have moved in and were ready to join. They have told us although we sent you the pricing and demo was done. We cannot honour that price.

    We emailed Callum but we have had not had a reply, probably busy but more so less interested.

    • ifellow
      4 months ago

      Even the basic package £150 for 1000 order is 0.15p per parcel.

      If you do 500 its 0.30p that’s FBA as well.

      So easy to see how they came up with a price of 14p after the first 1000.

      But to me, it’s still expensive. I’m doing around 600 orders per month so around 0.25p per order including FBA, £1.00 for 4 orders some being FBA is a bit steep for me. If people can afford it then they must be making some pretty sweet margins, but this is money I could allocate somewhere else.

    • ifellow
      4 months ago

      Those costs are plus vat as well I assume, so in reality, it makes it much worse

  • Peter
    4 months ago

    Hard not to buy the bias that exists in this article. The many negative comments, if anything, helped drive more traffic on the previous post to the benefit of Tamebay. Perhaps we should allow an article – a bad one – about the truly scandalous mismanagement of a new pricing announcement.

  • will
    4 months ago

    Damn, now the price increase is shelved does that mean Rihanna won’t be singing at LinnAcademy this year?

    I’ve been to a few LinnAcademy’s and my overarching thought as I return home is that I wish they spent the time fixing the software instead of organising that event. It must take months of peoples time to put it together!

    They can sort out LinnAcademy but xero integration is beyond them!

  • 4 months ago

    Great job Linnworks, glad to hear they’re supporting loyal customers. This will save us 20k-25k over 2 years.

    After looking around for a replacement, we believe they are the best option on the market.

    Just need to work on that 55 wait for chat on customer service!

    • Chris
      4 months ago

      You don’t say if you are saving the amount mentioned because they have given you the choice to stay on your old rate or if you are moving to the new rates and making the saving?

    • will
      4 months ago

      Yesterday “I’m raising the price of breathing air to £10k a year”
      Today “Air is free again”
      “You should be thankful that I’ve saved you £30k over the next 3 years!”

    • Ifellow
      4 months ago

      Literally how dumb linnworks customers are !

  • Chris
    4 months ago

    I asked for notification of any followup comments by email and got more emails than comments I can read.

    Is there some censorship going on here?

    • 4 months ago

      No… but some may be held for moderation by automatic spam protection software.

  • Stephen Wright
    4 months ago

    Linnworks seem to have a track record of miss-handling change…

    Take the .net fiasco… until recently the .net platform has not even come close to the desktop platform – “Hey your a new subscriber – lets see how you get on working with one arm tied behind your back”.

    14p per order doesn’t sound like a lot – but if you are selling low value items 14p might be more than your margin on that order (stack it high sell it cheap pricing – pound-world style). Your also adding it ontop of your platform fees and payment fees (10% ebay and from 3.4% + 20p per order paypal for example). Coupled with the fact that the software is there to help growth it could end up significantly more expensive than the old £150+ vat subscription (there used to be a level below this as well for low volume sellers). – as stated by the CEO its not each order that’s costing the company its the development team.

    At £150+ Vat for 1000 orders +14p per order after 1000 it might be to high a price point for a new business to consider.

    Then there is the SKU limit (used to be unlimited on the £150+VAT plan) of 20,000 sku’s on the new plan structure – we sell clothing, most items have sizes S – 5XL, We then offer say 4 colours in them sizes with 3 colour options for print. So one item takes up 96 SKU’s – Giving 208 items before you need to upgrade to the £450 + vat plan. If it was done on Variation parents then it might be more reasonable but SKU’s you can use up without even thinking about it – Take PC sellers that offer choices of hardware, Composite items would eat up SKU’s again with no real benefit – and who doesn’t have dead inventory in their warehouse that’s not worth disposing off but not really a “hot” item?

    Multi channel software should be there to support you – not to make you second guess if a product is worth sourcing as it might push you over your SKU limit or over 1000 orders and incur additional charges that make the item non-viable.

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