News coming from Sage North America later today regarding new plans for product and partner pricing is already riling the channel, as it is expected to have a negative impact on their margins and possible consolidation efforts.
In a letter to Sage partners, the company announced that there will be pricing and portfolio changes for the Sage 100 ERP, Sage 300 ERP and Sage 500 ERP products. These changes “reflect the trend of more customers adopting user based pricing as compared to module based pricing. With higher customer adoption of user based pricing, we are rationalizing the pricing across our ERP portfolio and aligning the prices to reflect the differences in value that the Sage ERP systems offer customers,” according to the letter.
Sage also said that it will “offer a lower priced Financials bundle to accommodate customers who do not require a distribution or manufacturing solution. As a result, there will be some changes to the user based pricing along with the value associated with the changes that are being adopted.”
These changes are set to be announced in a partner webcast Monday afternoon, which will likely include news of margin reductions for both large and small resellers. Sources indicate these reductions will likely have resellers earning a one-third margin on all sales, regardless of their size. It will also affect when partners get paid for a deal.
The new plan would apparently not only reduce the amount earned on a deal, but customers would have the option to pay monthly, with the VAR earning a monthly rate as well.
“What they are effectively doing is taking healthy partners and making them unhealthy, and the unhealthy partners will have a harder time staying in business,” said one concerned partner. “This will significantly impact what a partner can earn.”
There were also concerns that the new moves will curtail consolidation activity within the channel.
