Update on Pricing from Miva, Inc.

[Rick Wilson]

Re: Update on Pricing from Miva, Inc.

Suncam,

If you haven't been contacted then it's plausible there's no change for you, or you're one of the 200 or so special cases we're holding back on.

In no case should you get a surprise bill though, feel free to email me off forum if you want me to look into your account specifically.

[Rick Wilson]

Re: Update on Pricing from Miva, Inc.

Eric S,

The statement seems obvious to me and I explained it further in detail in my second post.

We spend roughly $150k a year on Disk Arrays and we spend approximately $500k a year on bandwidth.

However I spend multiple millions on product development, hosting infrastructure, and support.

It should be obvious to anyone who's used our product that Disk and Bandwidth don't have anything to do with uptime, seamless upgrades, high security and new features.

We're a privately held company and I'm certainly not going to turn this into a circus by posting our financials and having people chime in on them.

I can say this, while we're profitable we for all intents and purposes reinvest 100% of our profits into the above items along with sales and marketing.

Our competitors on the other hand have the "privilege" of losing millions of dollars per month each while having inferior products.

This makes it an interesting challenge to solve on our part for a number of reasons.

First we do think that when the Venture Capital/Private Equity market money becomes harder to get, at least 3 of those 4 companies I'm referring to will be in a lot of trouble, so we certainly don't want to try and raise money and chase them down a rabbit hole.

Second, we've studied very deeply what it takes to build equivalent stores on those platforms and frankly on average our pricing has been too low.

Now with that said, that is dependent on a number of things and it doesn't apply equally to all customers (which is why I said on average) and precisely why we're doing one on one reviews for anyone who asks.

So I'll repeat what I've said above a number of times.

We made a mistake on the small merchants and working on a new plan for them, they should reach out for now to be manually adjusted.

Second, we understand that there are use cases in which our logic doesn't add up and we're also reviewing those, just email me.

[aubreyd]

Re: Update on Pricing from Miva, Inc.

Larry,

It's my understanding from having read the posts on the previous thread that Miva is including everything in the gross revenue figure they're using including tax, shipping etc.

They're subtracting out cancellations, returns, credits etc.

[wajake41]

Re: Update on Pricing from Miva, Inc.

Rick, are shipping charges and sales tax included in your gross revenue total? Using the current stats on the admin home page, shipping charges over the past 3 months are about 18% of gross sales. And shipping is not a profit center for us.

[Eric S]

Re: Update on Pricing from Miva, Inc.

Rick,

You say that pricing based on disk, bandwidth and seats is unfeasible but give no evidence to back up that statement.

In order to make that case credibly, you need to be transparent and explain how much Miva is making currently and why it
is fair to increase rates for companies like ours from $160 per month to $1450 per month with less than 30 days notice
(we just received the email today saying its effective on 11/1). Miva has been making plenty of money off the software,
hosting and design/development services under the existing pricing. The fact that your agreement allows you to do it
with 30 days notice doesn't mean its reasonable.

We already absorbed a 300% price increase last year when you started charging for "seats" and we added 3 to meet our needs. For the record, we don't use Miva hosting so you are now charging us $1450 per month just for the software license. That is
$17,400 per year which is an increase of 900% or $15,480 annually. This is completely unfair and unjustified and its not
"market pricing" as you claim.

We have invested many hours customizing Miva to meet our needs. We haven't asked for anything from Miva so the
implication that larger customers are using all the resources simply isn't true. If you want to increase pricing 900% for
those needy clients who are placing demands on the company, go ahead but we don't deserve to bear the brunt of this
price increase. Small companies go from $40 to $70 which is a 75% increase but a company like ours gets to pay 900% more?
You definitely missed the mark here.

Eric

[K Series Parts]

Re: Update on Pricing from Miva, Inc.

Rick, please tell us the gross sales and margins for Miva.

[SunCam]

Re: Update on Pricing from Miva, Inc.

Ouch! A 50% increase for me from $500 to $750. I'm a one person company so I obviously don't need all of those seats and I only need about 1GB of disc space. Big shoes for a small foot. Qué lástima!

[lesliekirk]

Re: Update on Pricing from Miva, Inc.

Now that you are starting a new thread on this topic maybe you would be good enough to publish the new rates that you are proposing.

Here's a link:

http://www.miva.com/miva-pricing-update

Also read the Miva Competitive Market Analysis

http://www.miva.com/miva-competitive-market-analysis

And reach out to Rick.

[SunCam]

Re: Update on Pricing from Miva, Inc.

It sounds like this discussion has been going on for some time now but this is the first that I have heard. I am paying Miva $500/month for a dedicated server and an extra seat for our consultant and apparently you want more from me. I am also paying developers about double or triple that every month to remake Miva into a store that suits my business. Every time you reinvent Miva with a new release that cycle of developer expense begins anew. I am sure that every Miva merchant has a similar sad story to tell.

I never received a letter or even an email about this and I have not been active in the forum lately so I guess that's why I didn't get the word. Now that you are starting a new thread on this topic maybe you would be good enough to publish the new rates that you are proposing.

[Rick Wilson]

Re: Update on Pricing from Miva, Inc.

There is one "Frequently Asked Question" that I'd like to address as well.

Far and away the most common question that has come up is this:

Why is using top line revenue as a proxy to determine price fair?

It's actually fairly simple.

Two of the most commonly requested/expected things from our client base are essentially 100% uptime (or as close as humanly possible) and stable upgrades/quick bug fixes.

If you're a merchant doing $10k a year in sales if we're down for 8 hours or even 5 days like BigCommerce was earlier this year, it's not going to fundamentally put you out of business.

However, if a $10 million merchant is down for that long, one of the first emails I usually get is essentially "what are you going to do for me since you just cost me $x thousands in sales".

While we don't compensate for lost sales (as that would be both impossible and suicidal) we do spend a disproportionate amount of our resources on this type of activity which also directly benefits the much larger merchants on our platform (it's why in my opinion we have the most number of Enterprise merchants in the market according to BuiltWith).

Second is a similar line of thinking but for a bug fix or update that doesn't break your store. If you have critical functionality that's either already broken for whatever reason or breaks during an upgrade, a small merchant can live with those, but our large merchants don't want to wait weeks, months or years for a bug fix as it's costing them real revenue via lost sales.

Same is true for an upgrade that breaks your store for days and it's the most common horror story we hear about both Magento and open source carts in general.

So in both cases you're talking about huge internal expense that is impossible to recoup via Disk, Bandwidth or even Features (I can't realistically charge an uptime premium or for bug fixes).

I'm not arguing the top line revenue is a perfect metric, I'm not even arguing that it's fair. I'm simply making the case that it's a reasonable metric to use for those two items along with many others like that.

If I had a perfect metric for charging customers I would use it, but we're not a commodity like Oil or Pork Bellies, we're a highly advanced software solution based on intellectual property that powers people's business and we're still trying to solve a fundamental problem of how do you offer such a product to people who are both small and large and price it correctly.

[Rick Wilson]

I'm going to close the current thread that's running on pricing (as it's gotten long and hard to navigate, but it'll remain up for posterity and this one can become a new one if there's more meaningful discussion to have on the subject).

I'll sum up everything that's transpired since the announcement last week:

1. We screwed up on "small merchants". Roughly speaking those doing sub $10 - $15k a year in online sales. We're working on a new plan for them and are making exceptions for them in the meantime.

2. Anyone who asks for a pricing review can have one, it might take us a couple days to review their site and get back to them but we're looking at sites individually.

We're going to be reviewing our tiers to make sure we split them up correctly, if we "missed the mark" we'll adjust.

The main takeaway I want people to take from this discussion is really two things:

1. Pricing based on Disk, Bandwidth and Seats isn't really feasible in the big picture (we hoped Seats would fix this, but they ultimately did not) since especially Disk and Bandwidth are a minuscule part of our overall cost to provide a robust software platform.

We're not asking people to blindly accept these changes nor are we asking them to just "take it", we are however asking them (if only for a moment) to understand Point 1 and be reasonable in the dialogue (and the vast majority have been).

2. Our goal here has always been to price to market and I strongly believe that on average we're far closer to market pricing with our new model than most here realize. Many of our customers have been exclusively in Miva-land for a very long time and do not understand the true cost of ownership unless and until they actually use a competitive platform.

Now with that said, I am also 100% certain that there's no way to make an adjustment like this and get it 100% right and price everyone "perfectly", so anyone who asks will get a pricing review. Our only request on this is to allow us a few business days to work through it.

In essence we're trying to get a fuller view of the market and are taking into account our customers unique businesses and experiences.

For anyone who is either a very small merchant or just in general wants their pricing reviewed they should reach out to me via email. We have an internal process for going through these and it’ll take a couple days.

My email is [email protected]