Tally clarifies price hike and channel impact

Following partner discontent with stock recall and the alleged arbitrary increase in its prices, Tally recently clarified that the company was considering a price increase for quite some time and the increase in prices was partly on account of the rising government taxes as well upgradation of the product.

"The prices of Tally have remained unchanged for over 36 months, during which we also absorbed the taxes during the confusing Excise vs. Service Tax days dramatically decreasing our Gross margins. With the additional burden proposed in the budget, we took the call of finally revising the prices to a more appropriate, and hopefully, stable regime - despite upcoming tax changes (e.g. GST) or our major product releases and enhancements", said Bharat Goenka, MD, Tally.

Also, the company clarified that the new Price List is applicable from 16th April 2012 and is expected to remain unchanged till at least 31st March 2014.

Also, stating about the predicted additional features in Tally, Goenka clarified, "Enhanced features and technologies is a regular part of our releases, and all customers receive them at no additional cost for the first 12 months, and again at no additional cost if their Tally.NET Subscription is active (which includes all updates and upgrades, including all changes due to statutory/taxation changes, and also a host of services such as Remote Access and Synchronisation of Data, etc.). In effect, we do not link our prices to specific features/technologies, but to the overall experience we deliver as value to the customer".

However, the main chord of discontent for the channel partners was on account of the stock recalls which Tally issued for all dealer stocks pending over 15 days.

According to a prominent Tally channel partner, Tally has asked its partners to return the stock (unbilled for 15 days) and buy back the same at the increased dealer price questioning the legality of the dictum as invoices had been raised.

Tally, in response has stated that during the month of March, many partners tend to buy stocks in anticipation of increased sales. As long as there is no change in prices, this practice generally is harmless. However, when product prices change, the legal position is that the new prices can be applied only after ‘repackaging' the unsold stocks, and paying the difference in applicable taxes to the Government.

Justifying the decision of stock recall, Goenka added, "If we do not smoothly transition the market, including unsold stock, to the new price regime, it both confuses the customer as well as the partner. Therefore, we have instituted a series of processes to both reduce the magnitude of the problem, as well as to completely resolve it".

Also, Goenka hinted that this move will cut down the factor of hoarding and price disparity as a result of either undercutting or offering lucrative discounts.

"As this also has a tendency to reduce ‘opportunistic' earning of partners, there are a handful of isolated cases of heartburn - which is natural in any large scale network. Ultimately, policies and processes have to serve the good of the market rather than of individuals", he justified.

Like most of the Tally partner, the vendor too is predicting a cautionary response from the market as a result of the price hike.