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Shame on you Contabo
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Shame on you Contabo

OhJohnOhJohn Member
edited July 1 in Reviews

So I had been somewhat ok with the several contabo vps I had been using.

But what they are doing this month with a temporarily VAT tax reduction in Germany is just shameful.

Background: VAT in Germany is 19%. The german government decided to reduce this to 16% from July to December.

Contabo is not reducing there gross prices (incl. VAT), but instead keeping the gross prices and by that increasing the net prices, as taxes go down from 19% to 16%.

So companies in Germany are paying more for Contabo products with this rising of net prices than they did before because of Contabo's handling of those tax reductions.

That's a joke.

Everyone: don't buy Contabo products anymore.

They are not worth it and should loose every customer from now on.

(Remember, it's not the IT infrastructure companies that lost turnover in this Corona crisis).

@contabo_m : Anything to declare in defending this move?

Comments

  • OhJohnOhJohn Member

    Might have to check if this is an unannounced price increase as those are quite regulated for ongoing rent contracts in germany and normally need to declared 6 weeks in advance, if I recall correctly.

  • SynatiqSynatiq Member, Provider
    edited July 1

    Are you based in Germany? Not all EU countries have the same VAT rate, and VAT is charged based on the user's country rate.

  • OhJohnOhJohn Member

    @Synatiq

    Yes, I know. But for EU business customers that are not German businesses, they would have to do a reverse charge procedure.

    I don't know how they handled that before.

    But if they don't change net prices for e.g. Austrian or Italian business customers, but only for German business customers, that's a shameful trick they did with the German tax reductions.

  • FalzoFalzo Member

    they clearly always advertised only gross pricing and even mentioned that it's including the VAT but not which percentage. so if their service costs 5€ that'S going to be incl. 19% for germany, or now temporarily 16% til end of year. for a customer from france it will be a different percentage, they still pay 5€. and for customer from US who don't pay any VAT it'll still be 5€ (net=gross) then.

    nothing new here, a few companies in germany do it that way...

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  • HostSlickHostSlick Member, Provider
    edited July 1

    The prices on the site include VAT.
    If their prices would be excluding VAT, then your total invoice would be lower now indeed IF you are from Germany. Contabo applies for VAT Moss, they charge user country rate as Synatiq Says.

    AND Companies are not forced to reduce it by German law to the German customers anyways.
    Nothing wrong here.

  • dedipromodedipromo Member

    It's just a common practice for many merchants. Here in the US many prepaid service providers charge by gross amount as well, so if I'm in new york, I'll be paying $18 for service and $2 for tax, while in Oregon I'll be paying $20 for the service itself.

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  • OhJohnOhJohn Member
    edited July 1

    Just as an example, quoting Hetzner:

    "VAT taxes drop, our net prices stay the same".

    That's how a serious IT business is handling this imho.

    The same rule applies to Strato, Ionos, Myloc/Servdiscount/Webtropia and several other smaller German hosting companies. All of them keeping net prices while reducing gross prices.

    Only Contabo is trying the trick to increase net prices.

  • dfroedfroe Member, Provider

    IMHO both calculations are equally serious, net or gross.

    If calculating and advertising gross prices (what Contabo does) isn't serious in your opinion, why did you decide to sign a contract with them?

    If it results in an actual price change for you, you always have the right to instantly cancel your contract.

    IMHO it would be a naive assumption that lower costs for merchants are always passed to end-customers. When oil price goes down by x percent, gas stations lower their prices by max x/2 percent. And we are still buying gas..

    Try to accept that the world won't always be fair for you. It makes life more enjoyable. :)

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  • YmpkerYmpker Member
    edited July 1

    @OhJohn said:
    Just as an example, quoting Hetzner:

    "VAT taxes drop, our net prices stay the same".

    That's how a serious IT business is handling this imho.

    The same rule applies to Strato, Ionos, Myloc/Servdiscount/Webtropia and several other smaller German hosting companies. All of them keeping net prices while reducing gross prices.

    Only Contabo is trying the trick to increase net prices.

    Why don't you go with the others then? Or do you mean to say they don't offer 8GB RAM and 4 cores + 200GB SSD at 4,99€/month? ;)

    Not the best move they could have made PR wise but I expect several businesses to do similar things.

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  • OhJohnOhJohn Member
    edited July 1

    If they would have announced rising net prices earlier on, it would have been fine.

    E.g. if they sent out news that unfortunately they have to prices rising by ten percent from october on, I'm fine. And yes, their prices are competitive and I have recommended them in the past.

    But pr wise this is a desaster as it shows that they haven't thought about what this tax drop by the government is about and who should profit (yes, some businesses also, e.g. those in the tourism, hotel or event industry but mainly induviduals who could be on "Kurzarbeit" (get me the english word for that one) etc.)

    But with Contabo as a company that probably profited in the last couple of lockdown months (e.g. saw quite a lot of schools thart ordered vps there for their BigBlueButton systems and the like), this is a really bad move pr wise and I would like them to feel it. E.g. for me it means not ordering the dual xeon machines from them as I've planned for Q4 as they opened up the St. Louis DC but will look for other providers.

  • YmpkerYmpker Member
    edited July 1

    Fair point. I can understand. I'd still pick them again. Anyway, move on then ;)
    Perhaps some PHP Friends special could yield similar pricing :)

  • SplitIceSplitIce Member, Provider

    Pricing including tax is sometimes easier to handle at the billing system level too as you can just handle your tax requirements with your underlying book keeping / accounting (e.g MYOB) package.

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  • rcy026rcy026 Member

    @OhJohn said:
    this is a really bad move pr wise

    Actually, its probably not. Most people simply do not care, they know what their service costs and as long as that doesn't change they do not care.

  • OhJohnOhJohn Member

    @rcy026 said: and as long as that doesn't change

    But it did change for business customers from Germany as the net price increased. And the net price is the one that is relevant for those customers.

    So your argument would only apply to private end user customers.

  • dfroedfroe Member, Provider

    Of course you are free in your decisions.

    As already mentioned, if you don't agree with the price increase, don't complain but simply cancel your contract and move on to someone else who manages a better PR from your point of view.

    On the other hand, we don't know how many thousands of Euros you pay every month to your provider. Maybe a price increase of 2.5% for 6 months won't be a big deal anyways.

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  • OhJohnOhJohn Member
    edited July 2

    I'm not complaining about the price increase. As I wrote above, if they would be a price increase by 10% in an understable way I'm fine with that.

    I just don't understand why they do this - in such a in my eyes shady way - for a sth. like a ~2.5% gain.

    As contabo accounts for only 1/40 of my monthly hosting bill I don't mind that extra money for the next 6 month.

    But I now question what I think of them for the future compared to the good standing they had with me in the past.

    And therefor I will look elsewhere for the dedicated servers I planned on ordering in my approach of diversifing hosting providers.

    I still think this is a very poor business decision by Contabo. If you all disagree, that's fine. Then I'll have to start to wonder why all other large german hosting providers did what I would have expected - except Contabo.

  • dergelbedergelbe Member
    edited July 2

    The problem I see here is, even you don't like it it's hard to find a better deal.

    This said, how is their speed anyway? You have the HDD VPS? I will close my Aruba €1 VPS and move elsewhere somewhere in Europe. Contabo.de looks interesting, so does Netcup.de

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  • ViridWebViridWeb Member, Provider

    @dfroe said:
    Of course you are free in your decisions.

    As already mentioned, if you don't agree with the price increase, don't complain but simply cancel your contract and move on to someone else who manages a better PR from your point of view.

    On the other hand, we don't know how many thousands of Euros you pay every month to your provider. Maybe a price increase of 2.5% for 6 months won't be a big deal anyways.

    What!!??
    It doesn't matter if it's $1 or $1M
    And it doesn't matter if he earn a cent or thousands.

    Nobody is getting money for free. Every penny is important specially he earned that after hardwork.

    BTW, Don't know how VAT works in Europe so I'll not comment who is right here and who is wrong.

    But in my country provider have to pay fine and jail term as well if they try to deny the benefits of TAX reduction to their customers using some cheap tricks by increase the product price.

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  • FalzoFalzo Member

    the whole temporarily reduction of VAT causes much more work on a providers end regarding changes in billing/accounting than what it is worth even if you decide to "pocket" the few cents per service that change might bring.

    so it might simply depend on your billing setup which choice is the easier one. if you are more targeting the B2C sector it seems reasonable to me, to simply keep the pricing as it is. in B2B I agree that I'd rather expect to see the same net price all the time.

    Contabo has always been clear about their pricing being including whatever VAT might be, so I'd consider them more B2C and wouldn't complain.

    btw: do you expect to see your regular youghurt in the super market now for .28 instead of the usual .29 and are you going to refuse buying it?

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  • WSCallumWSCallum Member, Provider

    Cantabo have always advertised their prices as the same flat rate including VAT, you could therefore always argue that the pricing isn't fair as net pricing for countries with higher VAT rates have a lower net price. It keeps their pricing flat and the same across the board for all of their customers evidently.

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  • YmpkerYmpker Member

    @dergelbe said:
    The problem I see here is, even you don't like it it's hard to find a better deal.

    This said, how is their speed anyway? You have the HDD VPS? I will close my Aruba €1 VPS and move elsewhere somewhere in Europe. Contabo.de looks interesting, so does Netcup.de

    I've been happy with Contabo. Netcup might perform better but I prefer Contabo overall :)

  • OhJohnOhJohn Member
    edited July 2

    Ok, so I did some reading as I'm still wondering why any decent founder as businessman would do this for that small 2% gain. And now I see: The founders are not CEOs anymore since 2020 (february). If you read the business information and the employee reviews (all negative in 2020, while before most were positive) you see what is going on. I already wondered when I saw the new VDS line.

    From my old experiences the company evolved from a game server hoster (B2C) to a company that caters B2C as well as B2B (when the switched from Giga-Hosting to Contabo). And they did a pretty decent job - not premium but more than ok.

    Now it does look if the old founders and owners are out - at least from the day-to-day business as CEOs.

    And so now they do price increases by announcing it in a half sentence in the bill when the price increase occurs.

    And if you read the employee reviews closely, it does look as if the new externally brought in management team tries to triple turnover without additional workforce. New owners as well?

    I won't expect them to be the same in 2021 than in 2018 - when I would have recommended them to anyone, be it B2C or B2B.

  • WSCallumWSCallum Member, Provider

    @OhJohn said:
    Ok, so I did some reading as I'm still wondering why any decent founder as businessman would do this for that small 2% gain. And now I see: The founders are not CEOs anymore since 2020 (february). If you read the business information and the employee reviews (all negative in 2020, while before most were positive) you see what is going on. I already wondered when I saw the new VDS line.

    From my old experiences the company evolved from a game server hoster (B2C) to a company that caters B2C as well as B2B (when the switched from Giga-Hosting to Contabo). And they did a pretty decent job - not premium but more than ok.

    Now it does look if the old founders and owners are out - at least from the day-to-day business as CEOs.

    And so now they do price increases by announcing it in a half sentence in the bill when the price increase occurs.

    And if you read the employee reviews closely, it does look as if the new externally brought in management team tries to triple turnover without additional workforce. New owners as well?

    I won't expect them to be the same in 2021 than in 2018 - when I would have recommended them to anyone, be it B2C or B2B.

    Oakley invested in Contabo late last year, its no surprise as any of their other investments have had price increases within about 12-18 months - Examples include cPanel/Plesk, WHMCS, SolusVM (now shifted to Solus.io) - I will be surprised if they retain Contabos current pricing for much longer after the end of this year.

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  • jgillichjgillich Member

    @Falzo said:
    btw: do you expect to see your regular youghurt in the super market now for .28 instead of the usual .29 and are you going to refuse buying it?

    This did happen btw, all supermarkets and all other businesses had to apply the tax discount. It's pretty bonkers.

  • FalzoFalzo Member

    @jgillich said:

    @Falzo said:
    btw: do you expect to see your regular youghurt in the super market now for .28 instead of the usual .29 and are you going to refuse buying it?

    This did happen btw, all supermarkets and all other businesses had to apply the tax discount. It's pretty bonkers.

    nö it didn't. or I mean not in general. yes, all businesses are forced to apply the taxes for sure. but that exactly does not mean all prices reduced by the exact amount.

    some markets reduced a lot from .x9 to .x8 or even .x7 for marketing reasons - however a lot of the groceries still did not change or with the usual up and down of offer pricing wash away the effect. it's nowhere near to be reflected properly in that area of small prices. you have to go for bigger things probably to see an effect. I mean even for eletronics, let's at about 300€ this is a supposed to be a change of around 10€, but the volatility on these pricings will make it hard to decide if it's a real decrease or just marketing gibberish over secretly raised net pricing. just saying.

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  • jgillichjgillich Member

    @Falzo said:
    some markets reduced a lot from .x9 to .x8 or even .x7 for marketing reasons - however a lot of the groceries still did not change or with the usual up and down of offer pricing wash away the effect.

    Yea that's what I'm saying, that did happen. Are you german, have you been to a grocery store? Every big chain applied the tax discount. On every single item.

  • FalzoFalzo Member

    yes I am german and yes I have been to a grocery store. maybe we misunderstand each other here... I am not arguing that they would not apply the change from 7% to 5% - of course they did, because it's mandatory.

    but that does not say anything about the net price being the same as before. and especially if they change pricings in a way, that just the last digit changes by -1 or -2 it also does not mean the overall price actually reduced by exactly the discount implied by the tax reduction. it doesn't even say it's a reduction.

    something that was 0.49 before is now 0.48 - cool looks about right.
    what about things that have been 1.49 before and are now 1.48, shouldn't that be 1.46 ? have you seen things which suddenly are 2.34 instead of 2.39 or are they more likely also 2.38 ?

    that's what I meant with my example in the beginning and regarding the initial talk about contabo. you won't see or expect the supermarket to (be able to) do an exact 1:1 translation of the reduction to the market. unless you blindly trust their marketing efforts and advertisements - I can't help with that though ;-)

    and btw Contabo of course applied the change in taxes to their pricing as well. to every single item. as said - that's mandatory.

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  • sgheghelesgheghele Member

    I think that @Falzo here means that the change happened anywhere including grocery stores (it was mandatory) but you do not see it for many items at the grocery store, because prices change often. As everything costs relatively low at a grocery shop, you can’t tell the difference.

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