Intuit’s customers are revolting

I’ve always wanted to write that title about some company and on this occasion it is appropriate. My ZDNet colleague Larry Dignan has been cataloguing recent events at the US’s largest accounting software supplier for SMBs. It turns out that even they are not immune from competitive pressure:

On Wednesday I detailed how user complaints were surfacing over Intuit’s new fees. Intuit had planned to charge a fee of $9.95 per additional return, which covers preparation, e-filing and printing…

The reason for the hubbub is pretty clear: There’s some serious money at stake. Speaking of dinero, Intuit said its decision to remove the additional fees will shift some revenue around. Intuit said it will defer $70 million of revenue from the second quarter to the third quarter. Second quarter revenue is now expected to be $790 million to $810 million, down 3 to 5 percent from a year ago.

Given the amounts involved, this is a huge climbdown for Intuit. I expect we will see more rollbacks in the coming months as customers figure that getting price gouged isn’t something they are willing to accept.

Elsewhere, I have covered the way SAP’s German and Austrian customers have wrung concessions out of the software giant on the price hike in maintenance costs. SAP believes that’s an end of it but I think this is only the start. SAP seems determined to go ahead with a 30% price hike despite it being the only one that believes it is the right thing to do. Plenty of rhetoric coming out of Walldorf but I can’t find a single customer who believes this is a great idea. SAP’s strategy seems to be one of picking off individual customers or weak user groups but that won’t work. The customer base is too big. If Intuit customers can see alternatives – and they sure as heck don’t have individual buying power – then what might SAP customers do if they really look hard at their contracts?

It doesn’t go un-noticed that these are the two largest companies in their respective segments. If they can be found to be vulnerable  then who else might find themselves under pressure? I’m betting that Sage will be the next to feel the cold wind of resentment at vendor tactics designed to prop up share prices to the detriment of customer value. Think I’m being harsh? Check out the difference in language that software vendor management applies when it is addressing the financial analyst community and that applied to its industry marketing statements. You’d think they were different entities.

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Tagged as: Intuit, Sage Software, SAP