Do Mimecast Increases Amount to Price Gouging?

A new pricing structure by email security and archiving firm Mimecast is ruffling the feathers of some of its MSP partners, who allege the steep increases appear timed to coincide with the shuttering of the vendor’s main competitor. 

Earlier this month, Mimecast informed partners that it had “remodeled the price lists” to focus on just three service packages and three popular add-ons, resulting in an increase of the minimum order per customer to $1,200 per year.

The changes go into effect on April 4.

Writing in a blog post this week, principals at Chicago, Ill., MSP Switchfast Technologies accused Mimecast of capitalizing on the Jan. 11 discontinuation of Intel’s MacAfee SaaS Email Security product line, also known as MX Logic.

“It appears that Mimecast knew they had their MSP partners’ captive and decided to damage them just to improve their profit and stock price,” Switchfast’s Nik Vargas alleged. “Their decision is short-sighted and will cost them MSP business and market share long-term.”

Switchfast said the new pricing is particularly punitive to smaller MSPs.

Mimecast officials told customers that the streamlined packaging would ultimately be in the best interests of the vendor, its partner MSPs and end users.

“Ultimately, our ability to effectively serve sub-25-seat organizations with our TTP (Targeted Threat Protection) offering drove the decision to change to a bundle/minimum AOV (average order value),” Eli Kalil, Mimecast’s senior vice president for global channel sales, wrote in an email to partners.

“In order to best serve customers of all sizes, we made programmatic changes to how we price and package our solutions to small organizations,” the email continued. “We have a renewed focus on those who are most concerned with advanced security and archival use cases, which is where we see the bulk of the market opportunity for partners.”

The changes have drawn a fair bit of criticism on the Internet, with some MSPs trading advice about possible alternatives to Mimecast.

“Basically, they’re eliminating the entry level filtering packages and replacing them with bundles,” a poster identified as BostonMSP wrote in a discussion on Reddit. “The lowest of the bundles costs more than their Mimecast Express package and comes with considerably less features.”

Mimecast suggested that MSPs serving smaller customers consider other options.

“If you have smaller customers who only care about isolated targeted threats or advanced archival, then the logical choice might be offering them Microsoft native 365, as it should support them sufficiently and allow you to continue to add value and price the service effectively for your SMB customers,” Kalil’s email said.

But Switchfast’s Vargas argues that three months notice for the change is inadequate. Intel/MacAfee gave more than a year of notice before shutting down that service, during which time many of its former customers engaged Mimecast, he wrote.

“MSPs have spent the better part of the past year pitching Mimecast as a replacement and setting up clients with the service,” the blog said. “After configuring thousands of end users with Mimecast, MSPs are rewarded with this suspiciously timed, price-gouging maneuver.”

Mimecast officials defended the move in a statement late Thursday.

“Mimecast values our relationships with all of our MSPs and we’re looking forward to working together to more effectively best address the needs of both our customers and partners,” Kalil said. 

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