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San Diego Media / Unethical Company

1 9820 Willow Creek Road STE 450, San Diego, CA, United States Review updated:
Contact information:
Phone: 858.444.2700

To Whom It May Concern,
This document is regarding our experience with San Diego Media (9820 Willow Creek Road Suite 450 San Diego, CA 92131 – http://www.sandiegomedia.com). Statements of cost are based on documented facts.
Summary:
1. We are an established online retailer who was searching to upgrade our current ecommerce solution.
2. Initial estimate from San Diego Media was $62, 600.00
3. We paid San Diego Media $5, 000.00 for discovery with a clause to have $2, 500 refunded if the final price increased more than 30% over initial estimate (we had done extensive pre discovery).
4. Hosting was discussed at “around $2, 000.00 a month”.
5. During discovery, we had several hour long workshops which they were supposed to base wireframes of site design on. We received wireframes that had NONE of what we discussed in workshops!
6. Both wireframes and contract we’re a week+ late.
7. Final bid was $70, 097.00
8. Completely UNDESCLOSED they added a line attaching “One Percent (1%) fee for all site revenues in excess of $400K per month”!! This UNDESCLOSED fee changed the entire final pricing by an additional $37, 000.00 EACH and EVERY year and that is only factored at our current sales volume!
9. On-Demand and Infrastructure (Hosting) was listed at $129 per day, (approximately $3, 923.75 per month averaged over one year). This is almost $2, 000.00 more per month than what was discussed and this alone increased the project to an additional $23, 000.00 every year!
10. There was another undisclosed fee of “$5, 000.00 for Installation of the MaxEXP Server Farm”.
11. We easily decided NOT to go with a company that would run its business in such an unethical and unprofessional manner. Furthermore we respectfully asked for a full refund on discovery, as the 1% clause increased the final pricing by $37, 000.00 in the first year alone, without factoring in future years.
12. They have REFUSED to even honor their signed and written discovery contract and refund us our $2, 500.00!
Details:
We are a very successful Missouri based internet retailer with an excellent business reputation for over 7 years, our business has experienced a phenomenal growth and has revenue of over 8 Million a year, and projected for 11 Million a year for 2010. In January 2010 we started looking for a new ecommerce solution as we had outgrown our current solution.
Our research found a promising fit for our needs in a company called San Diego Media (9820 Willow Creek Road Suite 450 San Diego, CA 92131 – http://www.sandiegomedia.com). We had numerous e-mails and phone calls with Dave Peterson (Director of Business Development) some of which involved Andy Bray (Senior Vice President), by mid January we had seen several Webex demos and had phone conferences as well as received a response to our very extensive RFP.
We received a “Project Pricing (Estimations & Project Budget Guidelines)” from them detailing “Total Site Development & Integration Costs (+/- 20% based on discovery)” at “$62, 600” and “MaxCare and Ongoing Infrastructure Costs” at “TBD”. In our conversations we brought up hosting and ongoing costs with both Dave Peterson and Andy Bray, a number of “around $2, 000.00 per month for hosting” was agreed to.
In mid February we incurred the expense of flying our IT Manager (Lucas Forrest) out to San Diego, California to meet with San Diego Media and take a tour of their data center as well as sign the “Discovery Proposal”. Upon arrival our IT Manager toured the data center with Andy Bray and Matt Sylvester(Project Manager), at which time hosting types were described, but no pricing was offered and we made no selection in which hosting option we wanted.
The “Discovery Proposal” contained the exact same “Project Pricing (Estimations & Project Budget Guidelines)” and was for an amount of $5, 000 (pre-paid for Discovery/Project Plan). Because we had done so much pre-discovery as well as a spec detailed RFP, we requested for our protection that San Diego Media give us an amendment to the discovery agreement stating that we would be refunded the $5, 000 if the discovery process increased final budget by more than 20%. Brian Kent (CEO) of San Diego Media, took offense to this and after a discussion with Emily Church (CEO) of our business and Brian Kent, he finally agreed to amend the contract to state:
“…if the final pricing that comes out of the discovery process Increases the cost of the initial site development and integration more than 30% beyond the stated $62, 600…” “…that SDM will provide a $2, 500 refund…”
During the discovery process we had workshops where we discussed how we wanted the site to look and provided samples of other sites we liked and features we specifically wanted. They we’re supposed to provide us with wireframes based on these workshops. They made promise after promise on when we would receive the wireframes and 15 days late we received them, only to have wireframes that did not contain a SINGLE feature we requested in our discovery. This was a total shock after sending sample sites and having hour long Webex workshops where we showed them exactly what we wanted. The wireframes they provided did not even contain basic features that were in their deliverables document! Our IT department had to design the wireframes for them!
On March 26 we received “Documents for Final Discovery” from Andy Bray, detailing where “Total Site Development & Integration Costs (+/- 20% based on discovery)” at “$69, 397”. In prior documents listed “MaxCare and Ongoing Infrastructure Costs” at “TBD”, this document omitted it all together!
After weeks of waiting for Brian Kent to provide us with final agreement/contract, Brian Kent finally delivered the agreement 12 days later on April 7.
The final price had increased again to $70, 097.00.
That was not the bad part, to our shock and utter disbelief the contract stated:
…”Payment for said services will be $129 per day, calculated monthly, and prepaid monthly, beginning the first day of deployment and the first payment due on the 1st of the month prior to the estimated site deployment date. An additional One Percent (1%) fee for all site revenues in excess of $400K per month shall be due on the 15th day of the following month the revenue was booked on the site. Taxes, shipping and handling fees are not included and exempt in this calculation.”
NEVER EVER had we discussed giving San Diego Media a share in our company. This was never in any communication disclosed or even hinted at, and did change the entire final pricing by almost $37, 000.00 EACH and EVERY year and that is only factored at our current sales volume! Our projected sales volume for the first year would actually make this undisclosed 1% fee equal an increase of $52, 000.00 yearly, and would be even more every year after, assuming we continue to grow!!!
On top of that with “$129 per day”, the hosting came to $3, 923.75 per month averaged over one year. This is almost $2, 000.00 more than what was mentioned to by Andy Bray and Dave Peterson, during discovery and pre-discovery and NEVER quoted on any document or conversation at any point! This alone increased the project to an additional $23, 000.00 per year!
There was also a line stating:
“… Customer will also pay $5, 000.00 for Installation of the MaxEXP Server Farm of the three MaxEXP platforms – (Development, Staging/Testing and Live/Production)”
This additional $5, 000.00 was never disclosed as well, though we did assume there may be some setup fee involved.
All of these undisclosed fees equaled a minimum increase of $75, 000.00 yearly, over half of which was tied directly to our revenue growth by their 1% clause, and could very easily increase to over $100, 000.00 per year within the first 3 years with our projected growth.
Because of their complete lack of basic business ethics, we choose not to pursue any future business relationship with a company run in such a poor and dishonest manner. We further asked for the $2, 500.00 refund back as this was specifically why we had them add the clause regarding if the cost after discovery increased more than 30%. They have REFUSED to honor their written and signed discovery proposal and refund us our $2, 500.00!! In our opinion, Brian Kent is very disrespectful and does not run his business in a professional or ethical manner! If you are considering doing business with San Diego Media, we would strongly urge you to reconsider.

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Comments

  • Sa
      7th of May, 2010

    5.07.2010

    The posting and complaint by this Missouri company is extremely unprofessional, disingenuous, unreasonable and totally unwarranted in every way.
    Significant facts are simply misrepresented and/or conveniently not included.

    It is also interesting to note that the person lodging this complaint won't even mention their business name, but does not hesitate to libel our company and multiple members of our staff personally. This is the only such review ever posted on our company in its eleven-year history of conducting our business practices honorably.

    San Diego Media has been doing custom eCommerce application development in this industry for over eleven years, and we are 100% confident that we have managed the consulting/discovery process with this client in a professional and fair manner. As we do with all our clients.

    After repeated attempts by our executive team to help mediate this dispute, not once has this individual attempted in any manner to contact us directly and reasonably resolve this. San Diego Media has made no attempt to harm this company in any way, and even in this response have gone out of our way to not name them or to identify any of them personally.

    This company also spent a month in advance of going into discovery with San Diego Media, doing their due diligence, where they were given the opportunity to contact our other clients, ask them anything they wished, and were also given extended personal password access “hands on” to our application business centre. They received multiple demos of our software in the process.

    The pre-discovery efforts also included a two-day site visit by the company to our San Diego offices and La Jolla data center. It should be noted that after the discovery process is completed, and all the costs are fully established, a prospective client has the option of deciding to not go forward with the solution being offered. If they choose this route, they are also free to use the extensive knowledge transferred to them in the discovery process. It’s their call to accept the proposal or not. But to go around trying to trash our good name, because you don’t like our pricing, is beyond immature, unethical, and certainly bad karma.

    Both parties signed the consulting/discovery proposal on Friday, February 19th 2010. The document states that the discovery process would take place over four-six weeks. Our pre-contract discovery process and workshops are comprehensive and thorough. It is understood by all parties that discovery is a very collaborative process between the two organizations. This discovery was no different. The results of that discovery were presented over two sessions beginning April 1st. there was a total of 27 business days between signing the agreement and presenting the results. This is assuredly within the 4-6 week window that was agreed to by both parties.

    Our standard discovery agreement was modified at this clients request, and it was agreed that if initial site development and integration costs grew by more than 30%, that a refund of ½ the consulting fee would be returned. This was to be calculated less any yet unknown customization requests, that grew out of the discovery process.

    With this client, the final cost of the of the development project and integration, not including the special customizations requested, was actually $62, 530 or $70 less than our rough estimate of $62, 600. The signed agreement gave us a flexibility of $18, 780 (30%) fudge factor, and we used none of it. The special customizations required by this client, added about 10% more to the final cost, still nowhere near the 30% flexibility threshold stated in the agreement. Our organization invested over six week into this project and fulfilled all aspects and terms of the written agreement between us. Clearly no refund is called for.

    It is important to note that San Diego Media specializes in highly customizable solutions in the development, infrastructure and in how each client needs to be supported. Therefore until we completely understand all the needs and requirements of each client through discovery, it is just not possible to accurately prepare a budget for developing the custom site and supporting it ongoing forward.

    In this discovery agreement, the final cost of the eCommerce Infrastructure and Support was listed as TBD or "to be decided, " which is our standard practice at that stage. Pre-discovery, we just don’t know enough about the client’s needs and requirements to accurately recommend the ideal and appropriate Infrastructure solution until we simply know more. Otherwise every web site in the world would be hosted and supported exactly the same way.

    The prominent TBD "to be decided" regarding ongoing Infrastructure and Support Costs were highlighted in bold text on the discovery agreement pricing page and was not questioned by this client at any point of the relationship right up to the point of receiving the initial draft proposal.

    In regards to the ongoing cost of Infrastructure and software support fees,
    San Diego Media has a flexible array of programs available to all our clients. When this company’s representative personally visited our facilities for two days in February, and was in our data center personally, the options available were discussed directly and he selected our mid-tier option that included a high-performance dedicated UNIX database server over our shared infrastructure, so our proposal was presented with this option selected and priced accordingly.

    There has never been a question or doubt that all of our Infrastructure and Support options were available to this client. If they selected to be on our shared platform where costs begin at $1, 995 a month system, all they had to do was say they have changed their mind, and the proposal would have simply been recalculated. No problem.

    This prospective client asked for a system that would easily support over eight million dollars a year and flexible enough to fully support their anticipated ongoing and significant growth in coming years. In our opinion, this is a healthy volume of business and the application development and infrastructure supporting it should be planned appropriately. The system they selected and we included in the proposal was absolutely appropriate for a business of their size and revenue.

    San Diego Media always utilizes "best practices"” and provides all our clients with three (3) comprehensive eCommerce life cycle platforms. These includes (1) development, (2) staging /testing and (3) live production systems. They would all need to be maintained supported perpetually though the length of the relationship. All SDM systems are on a distributed architecture, are PCI compliant and are supported by significant security including redundant Cisco and Imperva Layer 7 firewalls with Intrusion Detection.

    Our pricing model includes unlimited and redundant bandwidth, unlimited power supply, a fully distributed UNIX architecture, load balancing, redundant routers and switches, unlimited data storage, email list management, white listing of emails, and backups.

    This client also required a dedicated account manager and wanted access to and the direct involvement of our executive team. They would also require a full integration with their ERP platform and it would also require 7x24x365 support. They also received six full pages of detailed features, deliverables and functionality for their customized eCommerce solution.

    When all facets of our offering are considered, San Diego Media is one of the most cost effective solutions in the industry.

    In fact, according to Internet Retailer 2010 only 8% of the respondents to their annual survey, spend less that 1% of their of their online sales on their eCommerce technology. Over 90% invest between1% to 10% and above. Over the past several years our comprehensive TCO "total cost of ownership" is generally in the 1% -2% range depending on each client’s respective needs.

    If any other business entity has any general questions or concerns regarding how San Diego Media has handled this dispute, and wishes to discuss these concerns, please don’t hesitate to contact me directly.

    Sincerely,

    Brian Kent
    CEO, San Diego Media, Inc.
    brian.[protected]@sandiegomedia.com

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