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New and refreshed subscription plans

[UPDATE: 9 Dec 2013 - the new subscriptions plans will take effect Monday morning, local time]

Today we’re announcing new and refreshed subscription plans globally to replace our Small, Medium and Large plans. We need to make these changes as we add other products, such as payroll in the US, and increase the storage limits for our game-changing Files storage feature.

[Updated] We’re also giving clearer guidance as to the size of business Xero is designed for. The 1000 invoices and 1000 bank reconciliation lines we’re listing are soft limits that have always been in place (was previously worded as “hundreds”) and we’d only get in touch for example if your use is using too many resources and affecting our service to other customers.

[Updated] We’ve listened to comments made below and directly and made an adjustment to the Australian plans, detailed in a new post.

The new plans are Starter, Standard and Premium. Small is now Starter and pricing is reduced in NZ, UK, Australia and the USA. Medium is now Standard. Large becomes Premium and in Australia and the US there are variations of the Premium plans with allowances for different numbers of payroll employees and storage. You will be automatically moved to the equivalent plan or most cost effective according to your feature use.

As always our prices are what you see is what you pay – no hidden fees per pay slip, no pay-per-use for certain features. Our core principles remain – unlimited users, free mobile app and bundled support.

We’re being very careful to align price to value, and believe Xero is highly competitive. Around 90% of our customers will pay less or $1 more. Any discounts, for example for non-profits, remain the same. The new plans and pricing come into effect with our release due December 9. All subscribers are being sent a notification within the next 24 hours.

The Xero product has evolved dramatically and with each release we try to deliver more value. This is the first time we’ve significantly tuned our plans since Xero began in 2006. In that time we’ve added many features – see the timeline. Our new Files service lets you attach source documents to your financial data, saving our customers costs on 3rd party storage as well as the hard to quantify costs of managing paper documents.

Xero Feature Timeline

Subscriptions include any bank feed charges or direct deposit fees that we incur in the United States and automatic superannuation fees in Australia. Our 24/7 support continues to be free to all subscribers and we continue to invest heavily in our support teams, recently opening our newest center in Denver.

We are also very pleased to announce larger Files storage limits for all plans beyond Starter. The Standard plan will have 5GB and Premium plans will have at least 10GB.

For accounting and bookkeeping partners, now is the time to consider what’s best for your clients, perhaps adjust your bundled pricing as appropriate, and communicate with them as needed.

Check out the detail for your region.

 

 

 

Read more about Accountants

 

186 comments

Graeme M
13 November 2013 #

Seems it is more driven by numbers of employees than anything. We have several companies on Xero and employ a lot of casual staff doing a small number of hours. Don’t need lots of storage or a thousand bills or invoices but end up being large solely due to employees. Cheaper for us to have a stand alone payroll and go for a lower subscription.

Cassandra Scott
13 November 2013 #

Sorry Rod, but 90% of my clients are now going to be paying $11/month more. They are currently on medium plans and have < 10 employees. They have no need for multi currency or auto super. To now limit this plan to one employee is absurd!!

Benjamin Bowles
13 November 2013 #

Hi Rod, loving your work and achievements, but a couple of quick points:

1. Will the multi-organisation discount apply still?
2. Will the HSBC bank feeds be £3, even though the US direct bank feeds appear to be free? Seems a little unfair.
3. It appears that the UK market is getting a little left behind here – no payroll enhancements or other new features – is it the new Xero business strategy to forget about the UK (one of Xero’s early market, with a lot of early adopters)?

Thanks

Jayne
13 November 2013 #

Well said in previous comments, cannot understand some of these changes myself! One employee!?!?! And limiting invoices to 1000, what’s that all about?!?!?
I can think if 2 clients straight that this is going to cause problems for and that’s without even thinking if the price increases.

Fiona
13 November 2013 #

I was excited when I first read this as I thought finally I will be able to afford to change to Xero… but alas no.
The gap between the Starter and Standard is just to big to jump. 5 invoice and bills per month in Starter is too low and 1000 is far to big for my one person operation. If Starter had quantities more like 20 bills and invoices you would have had me.

James
13 November 2013 #

Not cool – really not cool – the majority of our clients will be paying more.

Given the effort we (the accounting partners) have gone to to convert out clients, we’re now going to be the bad guys.

A little more notice would have been good -e.g. 6-12 months, you’ve just trashed any goodwill you had with us.

As a long time Xero user, partner, supporter, and advocate i just can’t articulate how bitterly disappointing this is. Bitterly disappointing.

Sara Rumble
13 November 2013 #

Not looking forward to advising the majority of clients they will be charged $10.00 more a month and suspect I am now going to have to convert them back to the original system. Disappointing decision from XERO given the support we have given to XERO in moving our clients. Definitely not a beautiful decision as we all know how successful XERO has become – basically leaving us partners to face the anger of all users that we have recommended converting. NOT HAPPY AT ALL

Steve
13 November 2013 #

Xero is a great product, and I’m happy to pay a bit more (I’m one of no doubt many who will now have to pay $11/mo more)… But restricting transactions to 1000 on ALL plans?

That’s just unworkable… I’ll have to research how to get my data out of Xero before December – What a pain!!!

Graeme
13 November 2013 #

I agree whole heartedly with James. I have just converted many of my clients over to Xero in the past few months and now to tell them the price is increasing is over the top. I had much trouble talking clients into changing, as it was.

James
13 November 2013 #

Also, by only emailing the subscribers you leave the dirty work to the partners.

Plus where we’ve entered into fixed price agreements with our clients – which is something strongly encouraged by xero, we’re the ones absorbing the cost increase.

It really is scumbaggery… No other word for it.

Rob
13 November 2013 #

Aside from Payroll, whats the difference now between the Global and Australian packages?

I’m currently on the medium plan and do not use Payroll. Global is a fair bit cheaper, even with the exchange rate, with what seems to be the same feature set. Are there other features that separate Aus from Global for the added costs?

Scott Rhys Jones
13 November 2013 #

This is a hard sell to small businesses that have <10 people on payroll that are local businesses not dealing in multiple currencies, and already use the Small Business Clearing House for their Super for free. We may well have to change these clients over to another system.

I agree with James – "not cool" and "bitterly disappointing". This will change the platforms I market to clients.

David Rynne
13 November 2013 #

I’m going against the flow of comments here. If you want the latest and greatest in accounting innovation, efficient technology which saves time and money, be prepared to pay for it. Software development is costly.

And if are an accountant / bookkeeper and your clients are going to whinge over a few extra bucks a month, then maybe the problem is with your clients failing to see the value that Xero brings.

Jono
13 November 2013 #

Great to see a reduction in the starter plan, however there are still better value services available, such as iBiz (albeit without the bank feeds, but without limits) for $5 /mth.

I agree with Fiona, the limits on bank rec and invoicing seem absurd especially when you get a gig of storage but only 10-20 items to attach to files to?

As it is, most accounting partners don’t appear to have many clients on the starter plan for these reasons.

If the limits were increased to 100 rec lines and say 20-30 invoices / bills the $25 would defiantly be worth it.

Kurt Sawatzki
13 November 2013 #

A ‘standard plan’ has one employee? Not many ‘standard’ business in Australia have one employee. So in summary you are increasing prices AND at the same time reducing the features in each plan. To top it off as the subscriber I have to review our subscriber clients on Xero, advise each of our clients affected and then sell it to them. Thanks Xero thats wonderful. No wonder your share price has gone up so much – by getting your accounting ‘partners’ to do the work for you

Bill Hardie
13 November 2013 #

A small price increase seems pretty reasonable given the additional features and functions. But this could and should have been flagged 6 months ago – or the announcement today should be that prices will rise next April. No one likes surprises.

Also – the restriction in number of invoices needs clarification. Is this a hard limit? What happens if a user has a busy month and needs to issue invoice number 1,001?

Rod Drury
13 November 2013 #

@Benjamin 1. multi org discount still applies 2. Yes, we can’t absorb the HSBC cost like others. Please raise it with them, they are an outlier, 3. Stay tuned. Lots of UK wins in progress. We/re investing heavily.

@Jayne, the 1000 invoices guideline is something we have had since day one to set expectations of when to use Xero. Working hard to make Xero work for much larger numbers but it’s a journey

@Sara, we believe the value proposition of Xero is getting better and better, Just Files alone should be saving them much more money. Xero Touch is seeing business reconciling before they even get to work in the morning.

James
13 November 2013 #

I have no problem at all with the principle of raising the price, all the points justifying it are fair – Xero is still the best platform out there and we won’t be moving any of our own entities off it -

but my issue is with the 1 month notice period and notice only being given to the subscribers.

Craig Marker
13 November 2013 #

I agree with the above comments.

As I have negotiated fixed price agreements with clients it is now up to me to make up the difference in pricing until the next review date, mostly 1 July 2014

This is not very good for your business partners to be treated in this way without some form of collaboration. My clients are already bringing other cloud solutions to me that appear cheaper to them that portray they are the same product as Xero. I know they are not but I can now see the clients going it alone with a cheaper product.

We may now end up just giving our clients a choice like the pre Xero days and let them then muddle through the program they choose then charge them to fix up their mess.

Chad
13 November 2013 #

Not happy, but understand we are stuck in a hard place in terms of our action based on the price increase.

Can Xero at the very least give us a no price increase guarantee for say the next 12 months to maintain confidence within our client base.

Will there be price changes to cash book plans?

Eddie
13 November 2013 #

Right behind you David – what is $1 in the big picture?
A big thanks to Xero for the update on stock and quoting – can’t wait to be honest.
Xero will continue to be #1 at this rate

Michelle
13 November 2013 #

The 1000 invoices a month is going to prove to be a problem, If you have clients using add on software such as Unleashed they are going to need to move from Xero. When a client sells a product in Unleashed it posts two journals through to the sales invoices, one is the sales invoice and the other is the stock movement journal. This means we have a number of clients who we will need to move off Xero onto other systems!

Scott Rhys Jones
13 November 2013 #

Another thought ocurred to me.

To base this around the number of people on payroll could become confuding.

I have a client (not on Xero, though I was trying to push them onto it) that fluctuates between 8 and 12 employees through the year – hiring casuals as needed. This would result in the plan price going up and down all the time.

Very confusing for the client!!!

Emma
13 November 2013 #

To be honest, i can’t believe Xero are charging extra for extra employees, when the payroll function is not 100% integrated.
Why are we still manually entering gross wages and PAYGW in to the BAS report?
If you’re going to charge extra for payroll, at least get it working properly first (it might be easier for us to justify to our clients this way).

Sandra Hunter
13 November 2013 #

The price rise is not a big deal. Of course they have to give the notice to the subscribers rather than the customers. Some subscribers don’t pass the cost on, that is their decision.

However I agree with Fiona and Jono above. I wish the small/starter option was a bit more flexible. Say 30-40 line items and 20 each accounts and bills. I have a number of small businesses who are just outside the criteria for the small plan and it seems a big jump from $25 to $50 per month for them.

Emma
13 November 2013 #

Initially when I looked at the subscription rate I thought it was unfair however for an extra $10/month I will be able to access the auto-super function which will be fantastic. On the flip side, I think that there should be the ability to have up to 3 employees on the $50/month plan… I don’t know of too many small businesses that would only have one person on their payroll for the year! If you want people to subscribe, you may have to look at that.

Catherine
13 November 2013 #

to quote from your subscription plans page:

Your price may go up, but not by more than $1 a month

Tanya Hulme
13 November 2013 #

Is there a quick way to ascertain how many reconciliation lines, invoices and bills a client has each month? I’m thinking some of our clients may be getting close to 1000 reconciliation lines combining all of their credit cards, paypal accounts and standard bank accounts, but I don’t want to spend my time counting them all. Thanks

Mary-Clare
13 November 2013 #

Hmmmm. Only 1 month’s notice? Not very professional at all. I expect more out of the slick operation that is Xero. As already said by others, now having to sell this increase to clients immediately is a big (rude!) ask. Whilst I can accept a price increase to reflect the additional features added over the last couple of years, it would be nice to be given the courtesy of a more realistic notice period. I do have one other issue. The $49 Medium Plan converts to a $50 Standard Plan that changes very little EXCEPT the reduction of employees from 20 down to 1. I could accept a $50 plan with up to 5 employees and no auto Super and no multi currency, but one??? This price point ignores a whole lot of micro businesses that have 2-5 employees and (whilst the product is excellent) will not justify spending $10 extra a month. This is not a comment on the value of the product, it is a comment on the reality of what our micro businesses expect to pay.
Grumpy start to the day :(

paul volpe
13 November 2013 #

if the client payroll head count changes monthly e.g. casuals, will the price change monthly and therefore cause firms some chaos if the approach is an on-billing direct debit of the subscription only (rather than bundled service package)

it seems the model needs to change – the client manages their own subscription and the ‘partner status’ is based on some property that the firm is the accountant. This is a better approach anyway – us accountants don’t want to be managing client software subscriptions

also disappointed on the lowest plan option – although you may lose some revenue on some existing clients, there is a big market missed by the current step up

James
13 November 2013 #

OK… After some clarification being given, and the email being reread i take some of my comments back.

Sorry Xero, not scumbaggery – I <3 you guys can we still be friends.

Kelly Ross
13 November 2013 #

I would like to know if the price’s will go up again and when. At the start it was based on invoices and that’s how i sold it to my client so now i have to tell them its changed and it’s based on how many employee’s they have :(. This is the first time i have heard about the price increase. How do we get to sliver with a price increase like this. Yes i know there have a lot of updates but some of us have been paying the same price for along time with out a lot of the feathers that are available now. What discount will my clients that have more than 1 business get. This is the reason people have veered away for other software programs.
:( :( :(

paul volpe
13 November 2013 #

also guys can you confirm if the accountant only plans for cash book etc are still good?

hope so!
cheers
Paul

Chris Ridd
13 November 2013 #

@James… :-) you did raise a very fair point. pleased the email clarifies but just for others that may not have got their email yet… in Australia we will indeed be offering price protection for many of our partners. Communications have/will be going out shortly but the plan is that we will allow our Silver partners and above the ability to lock pricing until 1st July for any subscriptions that they own. This decision was made in order to allow partners on the journey with Xero, some of which have moved to fixed fee services, to allow time to advise clients and make any appropriate adjustments to their services fees.

Mukesh Bajaj
13 November 2013 #

Thanks Paul for raising the question. Hi Xero can you please confirm if the partner only plans prices are set to change in near future. Thanks

Chris Ridd
13 November 2013 #

@paul Yes, spot on. Partner Edition plan pricing remains unchanged.

Mukesh Bajaj
13 November 2013 #

Thanks Chris for the explannation:)

Chris Ridd
13 November 2013 #

@James… :-)
You did raise a very fair point. pleased the email clarifies but just for others that may not have got their email yet… in Australia we will indeed be offering price protection for many of our partners. Communications have/will be going out shortly but the plan is that we will allow our Silver partners and above the ability to lock pricing until 1st July for any subscriptions that they own. This decision was made in order to allow partners on the journey with Xero, some of which have moved to fixed fee services, to allow time to advise clients and make any appropriate adjustments to their services fees.

Donna
13 November 2013 #

I have converted a client who had a big problem with a monthly fee. (I talked her around) She was on an older version of an accounting program which worked fine for her and her 15-20 casual employees. Now I have to tell her monthly fee is going up by $21. One of her fears was changing everything over and then the price going up. With Christmas coming she will be employing a couple more casual staff, so it will be another $31.
I feel sick having to face her with this information.

Chris Ridd
13 November 2013 #

@Kelly. This is the first time we’ve changed pricing in Australia since launching in 2008. Our intention is for these prices to be locked for the long term. I’m running webinars for Australian partners where we can go into more detail than a blog reply! Why not join us and register here

Chris Ridd
13 November 2013 #

@Tanya @Michelle Good points. This is a soft limit. We simply want to ensure that transaction volume guidelines are made clear. Before today’s announcement, we were quoting “100′s of invoices” etc. That in itself was causing confusion… for example… does that mean 200 or 800? So this now provides better guidance.

Peter Morgan
13 November 2013 #

So much overreaction for a moderate price increase that still represents massive value to the business community in Australia. I would think for most entities the increase will be from $49 to $60 per month. So that’s $132 per year. That represents maybe two or three hours of bookkeeing time in Oz? Or a tank and a half of fuel? A lot of you are forgetting the value. There can only be three objections to a price increase – 1. The value isn’t there (I think it is, in spades), 2. Clients don’t have the money ($132?) or 3. Clients don’t understand the value. I think accountants are scared of explaining (3) hence the reactions on here…..

@CJ_NZ
13 November 2013 #

Why is the NZ Standard NZ$ price $50 but the Global Standard US$ price $30.

Either you need a better treasury team of you are ripping off your home market (which should be cheaper!)

Stephen Paul
13 November 2013 #

Hey everyone,

Let me start by saying I love Xero and think its great technology and gives the client exactly what they want

As a platinum partner in the UK we are 100% committed to Xero

However I am somewhat suprised that we have been told via a email that the price will be going up within a month

Honestly I thought Xero were better then this and would have given us a longer notice period say 3 months but what worries me now is will it go up again? And if so by how much?

I totally understand the product and the developments that have happened recently and to be honest they are worth the extra £1 a month but it’s the way it’s happened which has suprised me

I have been a user of the software for 2 and a half years and it’s the first price rise that’s I can remember again no issue with the price rise it’s just the way it’s been communicated and the time scales involved

Will there be any planned changes to the pricing again in the next twelve months as the software develops or is that fixed for a period of time?

Apart from that keep up the great work and i still recommend other accountants use the software and bring there clients on board, it’s the best thing we did

Mary-Clare
13 November 2013 #

Still feeling grumpy … I am a lowly Bronze Partner. Do we still, at least,get our 15% discount, or is it all about Silver and above?

Dave Quested
13 November 2013 #

I understand you are trying to set expectations with the 1000 limit. But can you clarify what happens when we reach it? In real terms. This is a major for us.

We are an eCommerce add-on where customers might be handling 1000′s of small orders. Do we need to tell our customers they can only accept 1000 orders a month if they want to use Xero?

As we grow, we’ll also hit that limit with our own billing. Do we need to have a strategy to move off Xero when that happens? Seems like crazy talk. I think you are scaring a lot of people here.

Price increases are fine for new customers, but not ‘grandfathering’ existing customers surprises me. Increasing their costs with such a short period seems very unfair.

On aside, we’ve been with you for a long time and benefited from being on a Medium plan with multi-currency FOC, do we now lose that?

Mary-Clare
13 November 2013 #

@Peter … option # 3 … clients don’t understand the value. I must say I and my colleagues do push pretty hard on this point to our clients, but sometimes all they see are the $ signs *sigh*

Stephen Paul
13 November 2013 #

@peter totally agree the main issue I think is that clients don’t realise the power of Xero and the accountants are too scared to tell them in case they lose fees

Chris Ridd
13 November 2013 #

@Paul for Australian clients Payroll has always been based on the number of employees paid in a given month. So up to 20 employees paid per month with Medium and above that, the Large subscription. This principle doesn’t change, however we are now providing more options based on volumes of employees paid. As before, you can upgrade and downgrade plans to suit changing needs within your clients’ business. For partners (Silver+) that own the client subscription, we are grandfathering the pricing until July 1st 2014, in recognition of any fixed fee service arrangements that may need to be revised.

Mark
13 November 2013 #

I would have thought that if you are going to justify a price increase it should be based on some additional functionality. In terms of payroll I haven’t seen any increased functionality and there is actually decreased functionality in relation to completing leave forms, correcting errors when compared to other software. Also why should organisations who have a large number of employees be paying more yet organisations with large number of suppliers or transactions or bank feeds etc are now being subsidised by these organisations. I was about to doa deal at bringing multiple customers across to Xero but as they have more than 20 employees this is no longer economical. Also it seems smaller comanies are now subsidising the larger companies, why is this.
Yes David you do need to support software development but we do not need to support Xero expansion into USA market. Also if we are supporting software development let us see the benefits of increased functionality in payroll rather than a grab for money from obviously a major number of clients

Mary-Clare
13 November 2013 #

@Chris … what about Bronze Partners????

Sam
13 November 2013 #

Chris, the offer to silver and above does nothing to assist or incentivise the many many partners who are in the early part of their Xero journey. I like many others at the encouragement of Xero have based my model around benefit of fixed fee service to convince many clients to change to Xero from their existing software. This forces all the pain on the very advocates working hard to promote and grow your product, seemingly at our cost and reputation. Very uncool way to treat the very people who are doing most of the ‘heavy lifting’. Not happy Jan.

Chris Ridd
13 November 2013 #

@Mary, no change to Partner margin, we’re announcing business edition plan changes. We’d love to chat to you about how we can get you to Silver, we’ll get your account manager to drop you a line.

Mary-Clare
13 November 2013 #

@Chris … I have had this very discussion with my account manager. At length. My practice is based on provision of quality service not based around having lots of names on a tally board. I do object (and have said so to my a/c mngr) to those who have a large tally board being heavily rewarded and those that focus on a boutique practice are not. This is not the right forum to discuss, but I have your ear at the moment.
@Jan … I agree.

Chris Ridd
13 November 2013 #

@Sam We have spent many months planning these pricing changes, and ultimately when deciding to raise prices on some of the plans, we had to draw the line with regards to how broadly we offer price protection. Clearly our Silver and Gold partners have done a lot of the heavy lifting and have higher volumes of customers so that is where the bulk of the impact was going to be. I believe we have made efforts to acknowledge the hard work and advocacy that is present within our partner channel. I’d also add that very few vendors give advanced warning when making pricing increases. Nor is it an industry norm to offer price protection for a period of time.

Paul Meissner
13 November 2013 #

@all – It is always important with any changes to sit back, take a breath, analyse the impact of the changes and fully understand the value (and added value) in the product.

Some important points have been raised above:

- Transaction limit of 1000 p/mth: This is really a non issue (IMHO). As a gold partner firm with over 200 Xero clients we do not have one affected client. Limits look bad, but ask your Xero account manager to tell you if any clients will actually be affected.

- Price increase: The Prem 10 is a jump ($11) but the Auto Super is a game changer that people will love. Look out for Govt super payments changes from July ’14 that will make Auto Super compulsory…

- Client will have to switch back: If minor changes to the cost of the software cause clients to want to stop using the product then you (the advisor) haven’t shown them the benefits you get from using Xero. Set up Super payments and see the difference it makes to your clients.

- The lack of notice: I think Xero will agree that this was unfortunate. I am sure there were factors that caused this. Nothing we can do, but I agree it is quick.

Cheers, Paul.

Stephen Paul
13 November 2013 #

Obviously I don’t know the prices for the market outside the uk and know the product offers additional functions ie payroll but in the uk we are talking about a increase of £12 a year that’s not a massive amount to come out of our bundled margins – the more I think about it the more I simply just don’t care about it and respect the way that the powers that be at Xero are openly discussing with users the issues they have, I used to be a sage reseller and couldn’t even get to speak to my account manager let alone see comments from the CEO of the company

Rod Drury
13 November 2013 #

@CJ_NZ The New Zealand price is higher than the US price because we provide so much more in NZ.

We have invested many tens of millions on accountant side tools which will make your accountant more productive working with their NZ customers which hopefully translates to much better value. In time we will roll these in the US market as well.

We also have direct bank feeds which are more expensive in NZ and many other features.

Apples and Oranges. Hope that helps.

Chris Ridd
13 November 2013 #

@mark, Thanks for your comments. If we consider the features we have added since the launch of Xero in Australia and then the addition of integrated payroll in 2012 with no price changes – these recent pricing changes, including autosuper, represents great value.
I don’t think it’s fair to say there have been no enhancements to payroll and can point to a number of new features (why not check out the innovation timeline) but it’s clear there are some things you’d like to see. Head over to the community and raise or vote on the features you’d like to see.
Also on your last point, sounds like you could quickly get to silver with the deal you are talking about and as noted before, there’s nothing stopping you locking in a price by getting to silver but also help you secure partner margins too. Let us know if we can help.

Alan
13 November 2013 #

I’m really disappointed by the change in pricing. We too have been negatively impacted by the change – an increase of about $10 per month. Like many others who have posted comments we employ a number of casuals and choose Xero because of it’s integration with payroll.

The change in pricing is a real surprise. I haven’t seen any flagging of it anywhere and to just turn it on in a month is ridiculous. I’m astounded that this was not raised as a possibility to current customers months in advance. Further, I would have thought that the right thing to do would be to grandfather in people who’s overall cost has risen. Also, to use a non-sense statistic like that 80% of plans will be cheaper or $1 more expensive I find to be patronising. I’m sure when you actually dig into the data and weigh it by actual active users who are not on the smallest plan that number would change markably.

As a side note the 50gb limit for the $80 plan is useless. Does anyone actually store anything besides receipts in Xero? Ironically, the only place where I would have thought there is real value in storing more than receipts is in the employee area which doesn’t have the ability to store any documents.

For a company that usually gets it so right this is a real fail and a disappointment to those who have supported the company for many years. Looks like it’s time to start looking for an alternative.

Alan
13 November 2013 #

One month notice is inconsiderate and greedy. Bronze Partners will be underwriting (paying) this increase for their fixed price clients.
The one employee limit for a Micro (Mum & Dad) business is thoughtless and inconsiderate. A limit of two employees would at least show recognition by Xero that their clients are actually real people not just paying “entities’.

Chris Ridd
13 November 2013 #

@Dave we’ve talked elsewhere about the implications of the transaction limits (invoices, bills and reconciled statement lines) and nothings really changed other than providing greater clarity, so it’s not about scare mongering. For your other items we’ve asked the API team to get in touch.

Chad Hewish
13 November 2013 #

Thanks to Chris and Rod for replying to all of these comments – great to see interaction from the top.

John Schrieber
13 November 2013 #

Only 2 months ago at Xerocon in Sydney. Maybe that would have been the time to alert us to these changes. I agree with most of the sentiments above. Basing the pricing structure around payroll but then reducing numbers to 1 employee !! How many small and micro businesses would only have 1 employee? Would have been good PR if Xero provided a copy of what they will be sending directly to their clients, so that all users get the same message. Xero still has my 100% support but needs to tweak the PR department methinks.

Karen Blackwood
13 November 2013 #

Payroll employees!!! This is the thorn in my side!!!
To say Medium is now standard and to cut the number of employees by half???
All of my clients will be paying more!!! They will jump from the $49 plan to $60 or even $70!!! I can’t get my head around the justification…. leaving the number of payroll employees at 1 for both the small and standard plans… Why not at least 5 for the standard plan. Most family run (very small) sole trader businesses (my clients only have 2 employees) What’s more in Australia SME’s are classed as having 15 employees or less. So maybe consider this when pricing the $60 plan? Been loving Xero to this point. But the enhanced MYOB at $65 is far more attractive then $70 for my clients with 10-19 employees… There is no limits on payroll in MYOB!
Hoping all this feed back is welcomed and that you may reconsider.

Chelsea
13 November 2013 #

I’m excited about the payroll options, but what about those who are in states that aren’t fully implemented yet (Indiana)? How long will we pay the extra for payroll benefits before we can actually use the integrated payroll services? Note, I’m not a current customer, but I have been heavily researching Xero for the past few days.

Chris Ridd
13 November 2013 #

@John I take your point about announcing at Xerocon. We were indeed aiming to get an announcement out at the conference, however we were simply not ready. We have been working with a number of Xero accounting partners under non-disclosure and taking their feedback to refine the plan changes. We were unfortunately not in a position to make the announcement at Xerocon as we were working through some refinements (based on feedback) and so would have caused more confusion than answers.
@ John, @ Alan There are many thousands of subscribing customers that are using Medium edition to pay just 1 employee. Being cloud based we can see exactly the sorts of volumes of paid employees across the various plans. It may surprise you, but in Australia two-thirds of our customers across the board are either paying less or are only paying $1 more as a result of these changes. We have thousands of Small plan subscribers now saving $4, and we have many Large subscribers with less than 10 employees also saving $4 per month. Those customers with 2-10 paid employees are paying $11 more, but they are now also getting auto super and multi-currency bundled in, which previously was only available in Large. Those with higher volumes of paid employees and hence larger businesses is where the bulk of the price increases have been and we feel that is fair trade for the value they receive. Hope that helps.

1. Do you think we can anticipate an annual price increase?
2. In future could we please have more notice? Three months would be preferable.
3. How quickly does the jump happen from X number to Y number of employees. If the client does it on the 2nd of the month – does it affect the whole month – or does it affect the following month.
4. If an employee only works on the 1st July, then becomes inactive, but requires a payment summary – do they count as a Payroll Employee for the whole year?
5. I assume the subscription plan the clients move to will be clearly highlighted in the MY Xero area. Can I request, if it moves within a ’30 day period’ can it be highlighted in a different colour.
I personally invoice in advance – so have to re-bill clients – it also sounds like I could be jumping in and out of repeating invoices on a regular basis updating them as employee numbers change – as much notice as possible is desirable.

STILL ON SUBSCRIPTIONS – BUT ANOTHER MATTER…
6. I am based in Australia and selling Xero subscriptions based on other currencies, e.g. New Zealand. Because of this I am subject to foreign exchange rate movements and foreign exchange charges as Xero invoices me in NZ$. Is it possible a more predictable solution could be made available to Partners? I don’t know what that looks like but here are some ideas:
• Can Xero bill Advisors in the Advisors base currency, at a ‘fixed rate’ not at the base currency of the subscription?
• Can Xero Advisors opt to pay in advance in their own currency for subscriptions different to their base currency, to minimise foreign exchange fluctuations.

Carl
13 November 2013 #

I’m a massive fan of Xero and the advantages and usability of Xero still make it valuable, however, I have to agree with a number of the comments posted above:

1. The amount of time of notifying partners is pretty lousy, for some clients pricing points can be very sensitive and giving bronze partners a 3 week window to advise those changes will be hard to swallow, especially when they’ve recently been setup on fixed pricing plans.

2. The Starter plan is still too thin to be of any real use and almost seems like a cut down trial version, if you want people to grow into Xero you need to provide more useful numbers of invoices and lines to reconcile. And if anything a Starter plan should have the 1 employee payroll option, not the Standard plan. The Standard plan should have at least 5 employees, most standard businesses have up to 5 employees. If you made the Starter plan more usable I think you would see more starter businesses growing into the Standard plan and higher.

3. Timing of the announcement couldn’t be more worse, for some businesses the Christmas period will be the busiest time of the year, so having to discuss plan changes and invoice limitations will not bode well with some clients.

Will this put me off Xero completely, no, we will more than likely push it because we love the advantages of the single ledger concept but these pricing plans may increase that “cloud” hurdle for potential clients. And is it likely that our current Xero clients who will be affected be bitter about the price plans, of course they will be, any price increase is painful but the way that Xero has benefited their businesses will mean that nearly all of them will stick with it because they know it works so well and is so easy to use.

My suggestion is next time you make such a big decision regarding price changes I would strongly suggest a bit more collaboration with the partners, not to stop you from doing it but rather to review the value of those plan offerings. If they presented better value in the plans I don’t think you would experience the level of backlash in this blog.

Graeme M
13 November 2013 #

Chris you seem to be missing the point about smaller business’s that have lower transaction and storage requirements who employ a lot of casual labour for a small number of hours. I certainly wouldn’t say our businesses are Large but are now deemed to be due to high casual staff requirements.

Paul Meissner
13 November 2013 #

@Carl
- Other software providers are a lot worse at announcing pricing changes than Xero (no notice, no grace period and definitely no personal answers from the CEO and Aus Head).
- The starter plan is just that, a starter plan. I suggest you check out the great value in the partner plans as an alternative.
- The Standard plan gives those businesses who don’t employ people the chance to have value in their software cost.
- There is no good time for a price change, Xmas is better than end of year or BAS time.

@Karen
- Mum and dad family businesses don’t need the full payroll. Generally the pay is fixed so the PAYGW is easy to calc, they never get leave, etc. Recommend they do payroll differently and keep their fee at $50p/mth. Or show them the value in auto super and ask if they are willing to pay the extra $11p/mth for it.

For some of the other people airing their rants I say, for those people who use the word “proactive” on their websites, how about you look at using the changes positively rather than focusing on any negatives?

The pricing is coming, it’s locked and @Rod and @Chris are doing a great job being open and honest.

Xero is a wonderful product that has revolutionised the provision of accounting services and has created far stronger client relationships because of realtime data. They also deliver some really valuable updates (FREE) for Accountants.

Mark
13 November 2013 #

Chris you seem to not be listening to what people are posting. Why would someone like me who has spent a lot of time with clients, at my own cost, to convince them to switch to Xero now try and grow client base on Xero not knowing what you will be doing in the future re pricing of your product. The main complaint we all have is the way the pricing has been introduced without advance warning and therefore the uncertainity of whether this is a trend that will happen in the future. Also the seemingly unfairness in new pricing discrimating on basis of number of employees. All you have done is to trash your goodwill with business partners, especially new ones like me and therefore I will now be looking at other software options. The software is good, not great and there are other options out there who might be more understanding of importance of a strong relationship with all business partners, not a select few

KarenC
13 November 2013 #

I use Xero. I am a solo operator yet I currenty have to pay the higher subscription as if I am a large company just to have other currency feeds from my PayPal account which has both AUD and USD amounts and I need the USD conversions which come up in the feed. Small solo operators are not considered in the above. The Starter plan is just too small.

Carl
13 November 2013 #

@Paul I agree with you Xero is still the best accounting product available with great customer service and support and we won’t be jumping ship nor do we think our current Xero clients will do that either because Xero works so well for both parties involved, there’s still plenty of value. But I do think the timing and payroll plans could have been handled better.

Chris Ridd
13 November 2013 #

@ Graeme, Thats why Autosuper is being bundled into Premium Plans for Australia, to take the administrative headaches of managing super away from business. This is a headache all employers have regardless of the employment status of their employees. We think it’s an important feature to bundle.

@ Carl. Thanks for the comments. We did consult with a number of partners around the changes and we’ll take yours and others feedback on board.

@ Alan About 60% of businesses in Australia are non employing (ABS). We provide payroll to pay 1 employee a month in starter and standard to cater for those sole traders that want to draw a wage/payroll. We have the Premium 10 plan for those that pay up to 10 employees a month. We’ll continue to monitor feedback and the impacts to the various employment brackets that are in Australia.

@ Heather, we mentioned earlier that this is the first time we’ve changed pricing in Australia since launching in 2008. Our intention is for these prices to be locked for the long term. The payroll limits are based on the number of employees paid in a month and nothing has changed in principal to how this worked previously, if you need to pay more, you can upgrade/downgrade your pricing plan as you need. The employees paid in a month has no impact to your ability to run end of year payment summaries for all employees you have paid. For your other items, we’ve passed on the feedback to our billing team but for other readers it’s important to note this is not related to the pricing plan changes.

Michal Turek
13 November 2013 #

Hi all,
Price increase comes definitely as a surprise. I’ve been with Xero for more than 3 years (Silver partner in AUS) and love it, despite the little flaws it has, because I still think it provides better solution for micro and small businesses than their desktop rivals. I’d like to make a few points:
1. I’m yet to find a client for whom Small/Starter Edition would be suitable – fails each single time – so we end up on Medium or GST Cashbook.
2. Making 1 employee as a STANDARD is a bit under the par. This edition needs to have at least 5 employees to be attractive for micro businesses.
3. “Auto super” is NOT a big drawcard for up to 20 employees as these businesses can use Medicare SBSCH for free in AUS.
4. Neither is “multicurrency” – none of my current clients needs this feature at this time.
5.@Chris “Those with higher volumes of paid employees and hence larger businesses is where the bulk of the price increases have been and we feel that is fair trade for the value they receive.” They are actually not receiving any extra value – they just have more employees and process bigger pay runs.
6. Agree that the features which were received for $49 three years ago and features received for the proposed $60 in 2013 are definitely worth the extra $132 per year.
7. Just think that the first PREMIUM category ($60) would be much better proposition with up to 20 employees included (as it is in the current Medium plan).
8. Businesses with lots of casual staff doing short hours will be disadvantaged under the new plans.
9. Like the innovation timeline and the grandfathering in AUS.
Cheers
Michal

Paul Meissner
13 November 2013 #

@KarenC – Congrats, your plan gets cheaper. Multi-currency in other products would have you paying much more.

@Carl – I agree re timing. There is always a point when we go from not knowing to knowing about a price increase. Get to silver and your prices are frozen till June ’14.

@Mark – Time spent evaluating software is for the good of your clients. Keep their needs in mind. Evaluate all software and decide what gives you and your client the best value. User experience wise Xero wins hands down. Also, ‘discriminating’ on the basis of employees – how else would you do it? Auto super, timesheets, leave, employee portal, so much value to enjoy.

Steph Hinds
13 November 2013 #

Wow…..has anyone stopped to look at the new features timeline! Great stuff Xero and I can’t wait to see this keep evolving. http://www.xero.com/au/feature-timeline/

Well said @paul meissner :)

We along with our clients have been using Xero for 4 years now and I’m still amazed at the efficiencies gained from previous software we were using. We transfer clients to Xero every week from a variety of systems and as soon as we explain the benefits and show them the workflows price is rarely a discussion.

We have clients who were paying $64/Month for Multi currency and Auto Super that will now be reduced back to $60/Month and yes others that will increase to $60 and $70. But as stated above that is an increase of $132/year. We save that amount of money just with the Online BAS Lodgements function now available to accountants!

I’m really proud to be part of the Xero ecosystem. In my humble opinion $840/year is sensational value for what Xero delivers.

Keep up the awesome updates and new features :)

Lou
13 November 2013 #

@Michael Turek – “8. Businesses with lots of casual staff doing short hours will be disadvantaged under the new plans”

It’s these businesses that get the most value out of a payroll solution. Manually computing pay for lots of casual staff with variable hours is a lot more time consuming than a smaller roll of staff with stable full-time hours.

Mary-Clare
13 November 2013 #

@Paul: “Mum and dad family businesses don’t need the full payroll. Generally the pay is fixed so the PAYGW is easy to calc, they never get leave, etc. Recommend they do payroll differently and keep their fee at $50p/mth. Or show them the value in auto super and ask if they are willing to pay the extra $11p/mth for it.” — Interesting generalisation, but not my experience. As @Michal said … can do super through Medicare for free for less than 20 employees.
@Chris: “We have been working with a number of Xero accounting partners” – Was that a slip of terminology or did you only work with accountants and no BAS Agents?
PS … I think Xero and its people are awesome.

Jeffrey Budd
13 November 2013 #

I don’t have a problem with the price increase after 5 years of operation, may have been wiser to wait for the quote system to be integrated so the base offering is a better rounded product. However, I do feel that Xero is starting to fray at the edges due to its quick growth. Currently I have a new accounts manager who doesn’t even know my name (receive emails addressed to Jeremy, actually I have only ever received one email from them) and dealing with an add on partner who’s software doesn’t even work properly, impossible to get in contact with them and I am getting charged for the pleasure. Surley Xero vets addon partners first to make sure there software actually works and that they provide a minimum degree of support? Ah, the life of a bronze partner.

Tanja
13 November 2013 #

Hi I just read above that the Silver partners will be getting an opportunity for “locked pricing” until 1 July 2014.
We are currently bronze (striving for silver) and fully committed to converting all our clients. Now we have very little time to inform our hard working clients their subs will increase 20-40% on the 9th Dec. Can the Bronze partners also have a little help with the timing of this increase please!!??
We have a client who has 2 casual employees & will now have to pay 20+% after taking the leap of faith & converting only last month. Feeling sick about this – not good customer service. Help Xero!!

Chris Ridd
13 November 2013 #

@ Michael Yes, medicare clearing house is free for up to 20 employees – but it’s a pretty much an entirely manual process. Theres no efficiency and thats not what we’re about.

@ Mary we use the term Xero Accounting partners inclusively for Accountants and Bookkeepers. We work with Tax Agents and BAS Agents.

Nicole Elvy
13 November 2013 #

Hi I have a client that has over 1000 transactions in a month. Xero is obviously no longer going to work for them. I am correct in saying they have 3 weeks to find an alternative? They also use Unleashed which will makes it even harder to find a solution.

Nicole Elvy
13 November 2013 #

Hi there
I see there are lots of blogs on employees and plans. I can’t see this information any where. Does the number of employees not effect NZ subscribers?

Richard Wood
13 November 2013 #

@Nicole no, the 1000 is a soft limit for guidance. Regarding employees and plans, those are discussions about plans with Payroll, which we don’t have in New Zealand.

Chris Ridd
13 November 2013 #

@Jeffrey appreciate the comments. Quotes will come. We’ll rectify the account manager situation shortly and please give them more information on the Add-on thats not making you smile. We do review add-on partners before we list them on our add-on directory. We’re keen to follow up on this with you and make it right.

Timothy Munro
13 November 2013 #

C’mon everyone – the negative reactions on this blog are typical of what is wrong with most of the accounting industry today. Many accountants are too scared to tell their clients what to do and they let their clients dictate the terms of their relationship. WRONG!

Using FPA’s its easy to initially absorb any small Xero sub increase and then increase your FPA when you’re next due to renegotiate, or simply be positive and tell your clients the price will go up due to extra features that they will benefit from. If you as the accountant are positive you don’t have a thing to worry about. But if you are negative, this will easily come through when you discuss this with your client, and then you will have a client who questions you.

Do you think this is too simple? We’ve been using this approach for years AND IT WORKS. e-mail me to chat if you disagree – I can pass onto you some of our secrets about what works. #collaborationnotcompetition

Also, consider:

1. Xero Ecosystem – What other online accounting software provider has hundreds of awesome, proven cloud software solutions that you can add to Xero and tailor for your clients at a FRACTION of the cost of previous desktop software solutions clients have paid for? Xero wins by a mile.

2. What Xero gives to Accountants – FREE Practice Management software, FREE Workpapers, and very soon FREE Tax software. Using Xero as the “hub” of your accounting firm offering gives you HUGE cost savings and HUGE efficiency gains. More than makes up for talking your clients through a generally small cost increase for the Xero subscription.

Top marks to Rod Drury and Chris Ridd to be chatting and answering questions on this blog. It shows the sort of people they are. I recently tried to get another large accounting software provider to answer some questions, and they couldn’t shut up shop and go running in the opposite direction fast enough, refusing to speak.

Xero all the way!

Chris Ridd
13 November 2013 #

@nicole we’ve always had the limits guidelines and we want to ensure that they’re clear. Before today’s announcement, we were quoting “100?s of invoices” etc. That in itself was causing confusion… for example… does that mean 200 or 800? So this now provides better guidance.
If you need to reconcile 1001 statement lines, Xero won’t come to a stop! But the guideline is there (and always been there) for what we’ve designed Xero for.
Long and short – you probably don’t need to look for an alternative in 3 weeks.

Mark Parry
13 November 2013 #

Not impressed with a number of things.

1. Xerocon was held a few months ago. Nothing was communicated then about this at the conference which seems cowardly.

2. Basing the pricing around payroll numbers is arbitrary and ridiculous.

3. I cannot believe the numbers quoted that will/won’t be affected by the price rise. They are so far away from the percentages in my practice it is ridiculous. This is like a MYOB bait and switch. Quote some rubbish to justify a swifty. You should be better than that.

I am not denying that a price rise would have been justified on many levels.

However to base it on numbers of employees is ridiculous. I fail to see the reasoning behind this other than modeling which increases your bottom line at an appropriately better percentage than increasing current plans by x%/$.

I now have the unenviable task of explaining to the guy with 11 employees why he has to pay more than if he had 10. And no he doesn’t give a toss vis foreign currency transactions.

This is bizarre and will affect our product recommendations to clients.

Such a shame. So poorly handled and thought out.

Michele
13 November 2013 #

I don’t mind the pricing so much as the timing! 2.5 weeks to get to silver status to lock in the price for our clients until 30/6/14 or face the backlash of all the ‘not happy Jan’s’ or even absorb the increase with some clients like fixed fee ones! All during our busy BAS period, too!! Come on Xero, I thought you supported the bookkeeper better than that!
And we have to tell our clients about the increase ourselves. All ok if we were given a bit more time!

George
13 November 2013 #

Xero, you have made a lot of people very unhappy today. I suggest you don’t contact your business customers tomorrow because its only going to get worse.

Xero has completely ignored the consumer on this one. People should only be paying for features they want and need for their business.

Xero should be like buying a car. They should offer a base model and if you want the sunroof and leather seats you know you will need to pay more.

Haven’t they done any market research. Most people are tight arses and if they are paying for stuff they don’t need they get annoyed and look for alternatives.

We are already battling price savvy clients and converted them to Xero on the basis it is easy use and would bring there compliance costs down. I know $11/month extra is not much but when you add it up over a year and then each year it kind of becomes expensive.

Back to the drawing board fellas.

Chris Ridd
13 November 2013 #

@Mark Thanks for your note. I explained earlier in a previous blog post that we were simply not ready at Xerocon to announce pricing changes. It was our intent to do this but we were working through some of the plan changes with a number of partners under non-disclosure. Their feedback clearly demonstrated that we were not ready. On point 2, we are basing our numbers around both payroll AND auto super. This issue was referred to early from Paul Meissner in that ATO reforms next year around SuperStream will require auto super to be compulsory. We’ve had great feedback about this feature in the Large subscription plan since we launched Payroll back in May 2012 and so decided to include this in all Premium plans. Other vendors in the market charge anywhere from $1 per employee per month. When you factor this into the pricing based on comparative offerings, these pricing plans should be easier to justify.

Michael
13 November 2013 #

Our firm applies a value pricing model, since moving to xero we are generating 3X the revenue per head, coupled with value pricing ans some cool new features I can only see an upside to our bottom line, The pricing is no issue if packaged correctly.

Xero please bring localisations to South Africa……

David
13 November 2013 #

Many of the clients we have converted to Xero were using desktop software that had not been updated in years. The cost was a big issue for them but they wore it on our recommendation. As the Xero champion, I feel betrayed.

We also briefly considered setting up Xero ledgers fro all our clients but the cost per ledger multiplied out by a couple of thousand ledgers works out at 30 times what we’re paying now. We were thinking that Xero might see some sense on this one and reduce some of their pricing to encourage users to start with a ledger then switch to a full plan but clearly, that is not going to happen.

Guys, you’ve got a good product but your decision on this one makes you look like every software vendor that Xero users have been trying to get away from.

Ben
13 November 2013 #

I have just signed up as a Partner and looking at converting a golf club and a bowling club to Xero. Both are small not-for-profits who I convinced to change to Xero as it would save them money in the long run. They both have 2 employees so just exceed the Standard plan. All of a sudden, the price for them has increased $11 per month. It is no longer worth them investing the time to convert and I will be recommending they remain with MYOB, as with some other clients who I wanted to convert. The Standard plan should include up to 5 employees.

Alan
13 November 2013 #

My two cents worth.

When looking at the Growth Rate, Cracking Share Price, All the Country, Office and Infrastructure Demands not to mention Huge Pressure for more & more Features, this was expected wasn’t it? At some point the J curve needs to start heading up. Unless I missed something?? I still reckon there is a bit more to come but we will see.

I see it as Xero coming in line with competitor pricing. However I will say that it still lacks some of the core functions they do provide such as inventory & quoting. I just have to have faith it will be along soon enough. When it does then I’m good.

Overall if Xero is going to continue to be robust and reliable, like it has been to date, then there will from time to time be some pricing pain. I’d rather have a robust, reliable, feature rich, evolving, easy to use bit of kit like Xero every time.

For the accountants like us who are 100% Xero, Xero still Kicks Ass with the Single Ledger. If I cast my mind back to the End of Year Software Shuffle I still get the shivers. Xero was the first time we got to fix everything once, in one place and often at times with the Client involved looking on.

And with BAS integration already on WFM and Tax to come we won’t be moving anywhere anytime soon. I can’t wait to ditch my old Tax Software. Who knows with deeper e-signing integration we might never have to sit through another non beverage meeting again.

Look at all those savings in time from both sides of the fence.

FYI when we first moved to Xero we told all our Clients, either move to Xero or find another Accountant. If you think asking for $10 bucks a month is hard try that caper!!! I’m very happy to say we had a 100% take up at the time and most if not all our Clients love the interaction Xero brings. A hundred bucks here or there doesn’t come into it.

Bottom line: we will just suck it up Princesses and carry on. I know I’m going to be going back to the drawing board on pricing but we all need to do that from time to time.

Cheers :)

Mark
13 November 2013 #

Agree with most. Poorly managed and poor timing. The problem now is about trust. We will pass this cost onto our clients and most (if not all) won’t mind but many will want certainty this won’t happen again. We are gold partners but we cannot give any certainty to our clients about the cost of xero now. The trust is gone. Not good.

Leanne
13 November 2013 #

Not happy Jan!
We have been promoting your product and although we have a few clients on board they will ALL have to pay the increase of $11/mth due to the employee restrictions. I am concerned about continuing to transfer our clients to your product without certainty that price exploitation resulting from your recent popularity will not occur in the future.
Perhaps increasing the no. of employees to 5 may overcome many of the problems.

Greg Tuckwell
13 November 2013 #

Geez, given that there has been no price rises since I have been involved with Xero and considering the number of extra features that have been added during that time I fail to see what all this negativity is about. With software we used previously we had to pay increased fees for a product that still had bugs in it!! I have plenty of clients who will gladly pay the extra just for the autosuper side of things.

Scott Lynch
13 November 2013 #

Wow talk about an over reaction.

Yes it would have been nice to have a little more graduation in the pricing plans:

Starter should have 10 invoices and 10 bills per month to match the 20 reconciliation lines.

Standard should have 5 employees, not one.

But as an accounting partner in the same boat as @Alan and 100% Xero, it seems many other accountants cant see the forest for the trees.

When evaluating your accounting software you need to look at value not price. Take a good look at it, Xero is still far superior to any other offering out there.

The time and cost savings, not only on the client side but the accounting side far out weigh a price increase of $132. Even if you are still an old school stuck in the mud accountant that bills based on time you only need to find less than one hour of time savings per year to justify this, One Hour in 12 months!! Which you can all agree is more than compensated for with the single ledger efficiencies that Xero offers.

I’m with @ Allan on this one, Suck it up and get on with the job of helping your clients.

Sandra Hunter
13 November 2013 #

Sad to see so much complaining going on about the first price rise in five years. And such a small price rise at that. Would those Australians who are complaining about charges for payroll please remember that they are lucky they have a fully integrated payroll. NZ doesn’t yet. We usually have to pay much more for an Add-On to do what you get as part of your Xero package.

Chris Ridd
13 November 2013 #

@Mark We made the decision to price protect Silver+ partners until 1st July 2014. I’ve been in the software industry for 20 years and observe what other vendors do in the accounting space and have to say that this is not common practice. We made this decision based on feedback from current Xero partners who (under non-disclosure) helped steer a number of decisions regarding the price changes and to ensure our larger and more exposed partners had time to make any necessary adjustments. Timing is never going to be ideal and how we’ve managed this, well, there are clearly mixed views out there on how Xero has dealt with this. As for the future, I can safely say that we intend to lock these prices for the long term and anything you see on the roadmap today including inventory, quotes, etc we consider to be part of the core product and we have no intention to increase prices when these are delivered. We feel there is a strong value proposition for the revised pricing, and one thing that your customers can trust with Xero is that the innovation and features will continue to come.

Chris Ridd
13 November 2013 #

@Ben I assume you are aware that Not for Profits can get 25% discount on their Xero subscription. Go to: http://www.xero.com/au/not-for-profit/
Hope that may assist you with positioning the new pricing.

Chris Ridd
13 November 2013 #

@David Thanks for the feedback on Ledger pricing. It is a topical issue within Xero right now and at some stage we hope to have a recommendation on an approach to multi-org pricing. Certainly the introduction of Xero Workpapers and online tax lodgement via Xero Practice Studio has/will help bolster the value proposition of Ledger, but this is an area that we are certainly looking at. Thanks again for raising this.

Matt Freeman
13 November 2013 #

C’mon Xero, think about this. Xero – certainly in this country and probably others – is riding a huge and well deserved wave of positive public opinion around its share price surge, great product and ongoing customer uptake. It appears to me it is riding this wave because it is seen as a seriously non-mature outstanding business model with a great customer proposition and plenty of innovation and enhancements to come. To then turn around and increase prices now makes you look mature and monopolistic. Are acquisition rates now expected to slow? If anything, as a NZ subscriber, I thought prices for same-subscriptions would remain stable if not decrease, what a sign of strength that would be! Isn’t the incremental revenue per customer in new module value-add, not base harvesting? By the way, please fix your expense claim attachment click-through as the close box top-right works but is invisible.

Mary-Clare
13 November 2013 #

@ Timothy … As a Bronze partner I don’t get anything free
As far as sucking it up Princess … Nope, no need to suck it up. I’m still going to be using the best valued accounting software on the market but do feel comfortable in giving my feedback.
@Chris … Thank you for the clarification re terminology. Please note my name is Mar-Clare, not Mary.

Jacob Penn
13 November 2013 #

This is a big surprise for me. I like using the product but it is still pretty light featured compared with other products on the market. I think you are very lucky that quickbooks and myob cloud versions are still pieces of rubbish. Your new pricing structure has definitely now pushed me to move to Gem accounts. I don’t mind paying more money but I want more features. You guys are only releasing features that every other accounting softwares have had for years.

Ben
14 November 2013 #

Thanks @Chris. I was not aware that not-for-profits could get a discount. I still believe that your Standard product should allow up to 5 employees.

Jen
14 November 2013 #

I was surprised that the Standard plan only allows for one employee. Two would have been nice to accommodate all those husband and wife businesses.

But, as someone else has already said, it should be a conversation around value, not pricing. Great enhancements by Xero in just the past 6 months alone and more to come. A lot of those enhancements have actually meant that Partners are doing LESS WORK yet clients continue paying the same amount. I’m sure some will object to this comment and come after me. That’s ok, do your best. Someone has to point out the elephant in the room.

For those caught up with pricing, take another look at what you get for just $2 a day on the $60 plan. If you think there’s something better out there, go for it.

Dave
14 November 2013 #

I have to agree with@paul – the value we are getting as advisors is immense. This ecosystem of add on partners and the fact the our compliance is getting easier, plus the client growth that (in NZ anyway) is due to the huge PR Xero is getting.

Prices need to go up, the timing is fair, isn’t it also an opportunity for us to review our own bundled service pricing?

Gary Turner
14 November 2013 #

@Jacob – We’re very committed to releasing new core functionality as well as fresh ideas like Files (which have no prior equivalent in desktop accounting software) for all our customers and while there’s certainly some distance left to travel before we might feel that our core functionality set is complete, I hope our track record of improvement gives you some comfort that we’re well on the way.

Which specific features are you waiting on?

Hugh Bowman
14 November 2013 #

Overall the pricing is not unreasonable – I agree that the “Standard” package should have more than one employee I would think that 5 would suit many of our current clients and if they have 10 or more the Auto Super function comes into its own. (the clearing house takes 2 minutes if you only have 5-10 employees.

I think that we all agree that the starter pack is a joke and I have no idea of any business that would use it.

XERO still is feature poor in a number of areas. Our customers are getting much more savvy about what is in the market place and when discussing XERO (In an Australian context) will either ask for features that are available in other products and not XERO or will say they can get LiveAccounts for $29.00 a month that has all the features of the standard XERO product at $60 per month.

I note that XERO makes a big deal about the “ecosystem” that they provide to Silver partners and above, and that is great however are we asking our customers to pay the cost of providing partners with a great “ecosystem”

XERO certainly has the lead on the number of add-ons however as the big players move online many of these providers are now setting up to work with these other online systems so the the market is changing.

I am still a fan of XERO and will continue to support it for businesses that are a good match.

I have set my service agreements so that I Charge the client the published price for XERO so no problem in that regard. Not happy with the standard plan only having one employee but I will work through that.

Doc
14 November 2013 #

Xero, the underlying message from these posts seems obvious.

FEAR!

These responses seem to be based on uncertainty, previous bad experiences with other vendors and perception of pricing based on the bottom line.

Historically we have only had a few accounting software options to choose from and our practices efficiencies have been severely affected by this. These vendors have controlled the market and have profited considerably by offering (as time has shown) a sub-optimal product. Xero has proven that there are other options and that the growth of Xero users shows the distaste our industry has for incumbent software and brands.

Xero is moving forward at a momentous rate.

We are afraid, afraid of what Xero could become. Will it become the “Apple of Accounting” as Credit Suisse reported a week ago? If yes, then will it behave like Apple or Google? Will they become an obsessed monopolist? Only time will tell.

We know Xero is good and only getting better. We know they are gaining market share.We know they could take control of this space. We are scared as our practices are on the line.

We just hope that history is not going to repeat itself in the space that is accounting software. We hope that Xero is a company of it’s word.

Katrina
14 November 2013 #

Ditto to the complaints above re no notice, charges for bank feeds and no of transactions criteria. I or my clients won’t be using the payroll feature per the comments above! Xero needs to be more professional about the fee increases and to let us know when the charges are likely to increase in the future. I am considering another online bookkeeping system and this is a shame becasue I am generally pleased with Xero.

DavidY
14 November 2013 #

Never easy, but good on Xero management for fronting up and not disappearing into the backsatge

Rod Drury
14 November 2013 #

@Doc

That’s a exactly the point. The reason we started to Xero was to be a new type of company that does the best for it’s customers. We truly believe that if we look after our customers then that is the best way to look after shareholders. It’s just common sense.

For over 7 years now we have proven we do that, we listen and we respond. We accept criticism publicly. We are very available.

From time to time we have to rearrange a few things, which is what we have done here. We try to be open about the reasons why.

We admire Google and Apple in many ways but agree with you that in many occasions they act contra to the interest of their customers. We are very vocal when we see that. Acting in that way is just not in our DNA.

We do see this as a two way relationship. From time to time we may ask for the understanding of our customers as well. But I do hope we’ve proven without doubt that we act ethically and with strong values and a genuine passion to do the right thing.

Our team is following the discussion closely. Already based on feedback in this thread and through customer care we can see some areas where we can do better and we’re having good think about that currently.

Hope that puts your mind at ease.

Rod

Derek Draper
14 November 2013 #

Pretty classic discussion going on here. Great points from many of you. Just to throw in my two-cents…

Xero is supposed to be the anti-establishment product for partners. Do you want them to continue to innovate, scale and be flexible or do you want drawn out development timelines, yearly price increases and modularized pricing? Think about what you are complaining about here. You should have come to Xero for innovation, ease of use, mobility, etc… not because its cheap. You want things to stay the same for decades at a time, I hear QB is looking for new partners.

You are in on the ground-floor of what could very well be a revolutionary, industry changing product. Show some foresight. Show some patience. There will be growing pains but change is good… Contrary to what most accountants seem to think.

Anton Gerner
14 November 2013 #

Not sure if it’s mentioned in the thread above, but what happens to the AUD$19 cashbook subscriptions we use through our advisor?

Meryl
14 November 2013 #

I went to a presentation where we were told by Rod that the price for Xero subs would NEVER change. I was very impressed and I’m sure I have this in my notes. This was just prior to the share sale at the Ellerslie Events Centre, 27 July 2012. We were told enough money would be raised by this and getting more global clients. I told my clients this. Now I am really embarrassed as it looks like I was lying. Very disappointed in this respect.

Rod Drury
14 November 2013 #

Hi Meryl, we have been always careful to say that we would not charge more for the same product. Adding of Files is a major addition that adds significant cost to us and provides massive new benefits to all customers. We debated that a lot internally and were comfortable. For NZ customers, where we don’t have Payroll, we moved the price $1, lowered the price of the starter product and have created the space to add further new products and services over the next couple of years.

We are very aware of the commitment to not simply raise prices without delivering additional value. It’s just not us.

I hope that puts your mind at ease.

Graeme Peddle
14 November 2013 #

I can’t see any clarification above on the monthly cost of the ledger plans. What will they become (previously $5 per month)?

Richard Wood
14 November 2013 #

@Graeme – There is no change to the Ledger or Cashbook pricing.

Lara
14 November 2013 #

I think that there is too big a gap between starter and standard, 5 bills a month even for a business starting up is unrealistic. There should be a plan between the starter and standard or up the numbers for the starter, it seems like a classic goldlocks situation where you are trying to get everyone to go with standard.

I use Xero as a business owner, and do recommend it to people, it would be nice to have referral program…..

Siva Sivakumar
14 November 2013 #

Considering the feature improvements in the last many years and the value Xero delivers, the price increase is modest and appropriate and for a customer, its well worth the investment. People dont realise the time they have already saved (and therefore the costs) with a cloud based solution. Imagine getting an updated version for a desktop solution (either pushed to you or you manually download and update) and the effort that goes into updating your systems and think about the time saved alone.

All in all, Xero still represents strong value for money for SME businesses.

Carel
14 November 2013 #

The gap between Starter and Standard is ridiculous – starter is a NON-STARTER.
For Starter how about: One user, 20 Invoices, 100 recon lines and 20 bills? A business with 5 invoice and 20 recon lines should not look at a system like Xero. A napkin from Macdonalds would do.

chris gutierrez
14 November 2013 #

Why such a big difference in AU vs US/Global pricing? US and “Global” pays the equiv of AUD45 for the Premium 10 plan, we pay AUD60. Seems a bit unfair.

david baillie
14 November 2013 #

We are not opposed to paying more for Xero as it is a very good product, however on my understanding of the new pricing model and advise from your support staff leads me to believe that our clients monthly fees will be different on a month by month basis depending on the amount of “active employees” for each month.
We have one very small business who employ 12 casual staff on rotation and their fees will go up by $21 per month. They have no invoicing, few purchases and 50 transactions via bank feeds per month. Their price increase is 43% and i cant see that we can justify this to them!
As a business we also have all our xero clients on direct debit plans, however with fees changing on a monthly basis this becomes a nightmare to administer.
As mentioned earlier a fee increase is fine, however this should be static, I’m not sure this floating payroll model is that “beautiful” at all

Alexey
14 November 2013 #

Not sure about the rest of the world but here in NZ starter plan is still a joke. 5 invoices/bills 20 reconciliations pre month is just too damn low. I was so excited to see plan changes email just to be hit with this disappointment. Please increase those number to at least 10-15 invoices/bills and 50-75 reconciliations. If you are not willing to do that, and it sure looks like it, at least give us an option to buy extra reconciliation packages separately. This will allow us to manage all our xero needs during the busy months.

And for the very least add a counter of how many invoices/bills/reconciliations we have left. I have recently been on standards package, finished all my reconciliations and switched to starter only to find that all my reconciliations were now gone?!?! Unacceptable practice!

Show us when invoice/bill/reconciliation quota reset even better don’t reset them at the end of each month if we have spare ones left. If a company has 6 monthly GST return standard package is completely useless. with 2 monthly it would be good to know that once GST return comes around you have 10/10/40 quota rather then 5/5/20. Please listen to this.

Nathan
14 November 2013 #

There’s a lot of interesting opinions and information here. As a whole, there remains no doubt to me that Xero offers the most rewarding ‘beautiful’ user experience and features of any accounting package. However, the timing of notification for price changes, leaving the burden of notification to the subscribing Xero partners, and the additional issues relating to this is far from inspiring.

Furthermore, I must agree with many of the comments made by @Mary-Clare in relation to the treatment of Bronze Partners – these changes and the lack of consideration to smaller/boutique practices as they have been made is punitive. As much as I would like to make Silver in 2 weeks, it’s not going to happen and my clients must suffer as a consequence. It is one thing to not offer various rewards to partners until Silver, it is quite another to punish the clients because their bookkeeper/accountant is ‘not yet big enough to count’ in Xero’s eyes.

Luci
14 November 2013 #

I have a number of small business’s that fit the standard $50 month profile currently paying $49. But they have 2 employees; i.e. husband and wife directors. These clients are going to be forced to premium 10 subscription without any additional benefit. This SHOULD BE RECONSIDERED!!!!!

Jeremy Harris
14 November 2013 #

Price changes happen. It’s value that matters. And, IMHO, there is a helluva lot more value in the Xero product than there was when I signed up my first client.

For many Xero partners, this isn’t only 3 weeks notice of a price rise – it’s really 7 months notice. I can’t say that I’ve ever systematically and broadly published a price increase 3 weeks or 7 months out. In fact, the traditional accounting business model is to let clients know what the price is in arrears – after the job is done. Thankfully, many of us are changing that model and talking about prices upfront – which is why a price increase like this would hit our bottom lines without the special pricing until July next year for silver and above partners.

I do feel for bronze partners, many of whom are probably new to Xero and have had recent conversations with clients on a price that is now about to change.

I’m guessing that the most common price increase will be either $49 to $60 for 2-10 employees, or $49 to $70 for 11-20 employees. I hear the concerns raised above about small businesses with many casual staff. Still, that’s a price increase of under $200 per year if you pass on partner discount and take off GST. I think that’s still value, especially if the auto super payments feature will deal with the requirements that come into effect over the next two and a half years for employers to report and pay super contributions in a standard electronic format.

I personally don’t feel as though I will have any trouble building in the price changes and conveying the value. One of our clients will see an increase of $26 per month from July next year – but IMO that’s only going to be a true reflection of the value for them, given the efficiency gains that they and we have experienced since moving to Xero.

Taking a holistic view, as others have mentioned above, there is tremendous value on the way for silver and above practices in Practice Studio including tax.

I want Xero to be a strong business that is around for a long time, and I trust in the leadership to make the decisions that are in the best interests of this objective.

Michael
14 November 2013 #

I think the new pricing structure is justified! Xero have not increased prices in 3years! Some of you need to take into consideration the added value Xero brings to you/your clients. The increases are small price to pay for the beautiful innovation Xero brings to the table. If the small business’ cant justify paying slightly extra, they can be migrated to their accountants partner plans, or, go back to completing a physical cashbook and using carrier pigeons. Get with the times people!!!

Mike
14 November 2013 #

OK, so it’s only $1 extra a month, but I read in today’s Dom Post Business section that the prices we are paying in NZ are higher than those of your US customers (existing and future).

This is probably commonly referred to as re-aligning prices to the markets.

But give a thought to those early NZ customers who has helped your business gain traction and become the success it is today. Lose that loyalty, then they’ll walk as soon as there is a better alternative proposition, which, as you know, will happen eventually….

Perhaps you should consider offering your long term customers a discount??

Ah, just some thoughts guys- keep up the good stuff but don’t get carried away with the hype and frenzy.

PRAKASH
14 November 2013 #

new pricing is expensive for Indian customers since the bank feeds are not working and 50 USD per month will be expensive compare to other packages

Chris
14 November 2013 #

Obviously Xero is now aware that their product is now a margin above the rest on the market and are trying to maximize their profit margins per client. Unfortunately this is a good strategy in the short term but a devastating strategy in the long run since a number of customers will find alternatives and move their clients who are more cost effective and and believe it or not getting new customers is far more difficult than retaining existing ones.

This is the 2nd price increase we have from Xero for the last 2-3 years and we are now paying 30% more for the Medium plan than what we paid when we signed up. Not only Xero is offering new features that may/or may not be used by some clients, decreasing the number of transactions and limiting payroll in the new increased price plans.
I am terribly sorry but this is just unacceptable and is NOT going to be a good strategy for the long run. You may have turned your back on current customer abusing their barrier to change from Xero to another solution but in due course this will turn against you.

I hope someone, somewhere reads this and realizes what they are doing and be convinced to change this strategy before its too late.

Blair
14 November 2013 #

I was looking to sign up to the medium plan. This was simply because the small plan is just too small with only 5 invoices and medium far exceeds the number of invoices I require. A Xero representative, (although very helpful) told me there was some exciting new plans coming – I had hoped for an in-between, but it seams my hopes (and those of numerous small startups in a similar position) are gone. On top, to hear the medium plan might be increasing in price just rubs salt in the wound. Surely you can see the massive gap between the small and medium plans and understand there is a huge market here? The price of medium was JUST bareable for a small startup business before, however with an increase, it really makes it difficult to weigh up the benefits over the cost. Especially when MYOB live accounts does almost the same thing for only $30 AUD a month. Please add a plan between starter and standard!!!

Tim Ellert
14 November 2013 #

Xero – i am afriad you have got this very wrong….

Just read the comments above and realise how many people are un happy with the proposed changes. Please discuss the following internally and u-turn ASAP.

Key issues:

1) Much more notice of price change is needed.

2) You should have supported your loyal customers by keeping existing pricing and only changing pricing for new sign ups

3) Who cares about files? You are not Dropbox, you are accounting software and we dont see why we should pay £1 a month extra for unnessary features. This should have been a bolt on to stanard account for those that want it.

4) Charging more, yet limiting accounts to 1000 is not right however you want to spin it.

5) Xero is a great product and was priced well. You are not the only product out there and the way you have handled this will only serve to lose you market share as people leave for more competative and less restricted products.

Please sort this out quickly!!!

Tim Ellert
14 November 2013 #

It seems to me that the main issue here is that the small business, who is the most cost sensitive, is the one with the most to lose from the new pricing changes. Xero need to look after the small business as they become the medium / big businesses!!

So further to my comments above, i think the solution here would be to add another pricing band called “Small Business” that sits between starter and standard.

The plan would support the following:

1) 5 Employees
2) 50 bank rec per month
3) 15 invoices per month
4) 1gb files storage
5) unlimited users

And pricing should be just above halfway between starter and standard.

Look forward to your thoughts..

Chris Keeble
14 November 2013 #

Xero could consider resolving some of the many problems which have still not been fixed before raising prices.

Competitors such as KashFlow are already cheaper…

Gwyneth Moss
14 November 2013 #

Xero has been very helpful for my very small business. Apart from the inability to handle Paypal fee refunds and the delays in support. My problem is that I use very little of the vast functionality of this system but because I have slightly over 20 bank lines a month I have to pay standard. If I can find another system that is cheaper and does the bookkeeping then I will switch. Unless Xero allow a few more lines in the Small category.

Gary Pascoe
15 November 2013 #

@Rod

As a direct subscriber to both Xero for my small business and Xero Personal for my personal finances and being told in the space of a couple of months that both products I am actively using and promoting to others (and of which I am almost locked in to from a practical sense) are either immediately forcing me into a 22% price increase or being discontinued entirely, I am finding it very hard to see how you are acting in the interest of the customer.

I am happy for your success and understand and support the need to grow. Congratulations for those achievements. I am even happy to help pay for some of it, but an immediate 22% price increase is a bit rich.

I normally am ambivalent to these issues and avoid participating in these conversations but your earlier comments about not wanting to act like those other companies and the company commentary on the Xero Personal decision all seem very empty. For me actions send a stronger message and what I am seeing is several “contra” decisions in what appears to be more than “rearranging a few things” in the drive to growing presence in larger markets. The closeness of these decisions to your revenue raising and other growth activities also raises many questions on the drivers of the decisions.

I do however see this in a positive light – I now get the opportunity to develop new knowledge and skills in exporting data from two Xero products.

I wish you all the best for your journey onto world domination.

Peter Sobczuk
15 November 2013 #

Non-For Profit get 25% discount. We are a silver partner and are about to subscribe a couple of Non-For Profit. One of them has 1 employee and the other one has 6 employees.

a. What is the cost before the 25% discount, for a non-for profitt?,

b. Do the silver partners get another discount?, What will be the actual amount payable after each discounts? for each of them…

Gary Turner
15 November 2013 #

@Tim – The vast majority of customers will see either a $1/month or £1/month increase in their monthly subscription plans or a decrease compared with the outgoing plans, as well as our ongoing commitment to adding even more functionality and value.

The guide limit of 1,000 as we explained earlier, is a simply guideline to help people assess whether Xero is right for them. It’s not a hard limit and it would only be a problem for a customer who significantly and consistently surpassed this volume. According to our own analysis, that’s a tiny proportion of existing customers, so chances are you should be good.

Gary Turner
15 November 2013 #

@Chris – Building the best product we can is our number one priority, as well as delivering the best value for money and service in the UK.

Is there a specific functional issue you’d like to see us address?

CM Books
15 November 2013 #

Cannot believe that it did not occur to a single member of the Xero hierarchy to flag this up at the recent Xerocon. Unless of course it was a deliberate strategy to ‘bury bad news’!

Gary Turner
15 November 2013 #

@CM Books – If I may respectfully add some sense of perspective to this for UK customers and Partners; the plan changes equate at worst to an increase of around 3 pence per day on UK Medium or Large plans, or a reduction for customers on the current Small plan of around 10 pence per day.

All UK Partner Edition prices remained unchanged.

If we’d locked down our plans by the time Xerocon took place, we’d certainly have flagged them.

Jeff Charge
15 November 2013 #

I have no problems with the price rises or even the period of notice (we are bronze so will not get the extension), but I have a big problem with the standard plan having one employee. That is ridiculous. If standard plan is to cater to the tens of thousands of micro businesses, then it should have 5 employees. By its very name, standard should be the standard small business, ie mum, dad a casual employee or two. By saying that they now get multi currency & auto super payment is hardly a convincing sell for them. Change standard plan to have 5 employees & all is fine. Don’t & micro businesses can find better value elsewhere.

Kerryn
15 November 2013 #

I am also interested in answer to @petersobzcuk. And confirmation that the partner discount will further apply to the special deal prices being offered to Silver/Gold partners. So fixed price less partner discount.

Ali Lomas
15 November 2013 #

One employee seems a bit unfair for a standard plan. Automatic super is really not an issue if you have less than 20 employees anyway, and that particular argument is neither here no there. For more than 20, sure its helpful, but still not essential. A lot of clients really don’t need multi-currency either..

A fairer system would be to make the standard up to 10, then the premium plans could start from 20.

One of the BEST features of Xero was its price smashing of MYOB and that really convinced a lot of clients to make the move, but I can see a few are going to move back, especially those with a large pool of casual employees. I really don’t see my clients staying with Xero when they have to pay $90/month for it (and there a couple who will be).

Sarah Bishop
15 November 2013 #

I agree with @Jeff and many others above 1 employee on standard is a farce and should be 5 employees.
Mum + Dad + 1 employee now paying $11 more for what? In my experience they don’t need multi currency and usually paying super via direct debit or the medicare clearing house which is free and not complicated or they only have to pay one fund via it’s own online portal.

Jason
15 November 2013 #

I cant believe all of these comments are saying the increase of 11 dollars a month is “only $132 more per year!”. That’s not what this is about, it’s about Xeros price relative to it’s partners. It was already more expensive than QB and MYOB, but we were selling the fact that you would make up the money with how easy and time efficient the software is. Now we have to justify it being worth double MYOB Live’s package ($29.95) and $25 more than QB’s largest online package (not that many of the clients will need their largest package, but they can still get it for $25 less!!!!)

In short, yes Xero is great, but in the end, savvy businesses will decide to save money anywhere and everywhere, even if this includes spending more of their time doing books. Xero may not have lost too many clients with this price increase, but I’m sure its going to be very hard to get new ones.

Tim Ellert
15 November 2013 #

@Gary, @Rod

I can see from Xero’s reponses that you don’t care about the little guys anymore – they are the ones you are charging more to support the features for the big guys / partners who have no increase / fixed pricing.

Its a real shame / point of principal now.. I have recomended Xero to lots of people including our accountants and boy do i feel a sucker now.

I think we all thought that Xeros values were about Trust, fairness, doing the right thing and producing a great / game changing product – Seems you have very differnt goals.

I would still like to hear your thoughts about the small business plan i and others have suggested above (5 employee, 15 invoice etc)

And i still uphold you have really dropped the ball with this one for all the small businesses out there – how much more negative feedback will it take from your users before you adress this?

Sean Limpens
15 November 2013 #

Interesting that Xero chose not to announce the price changes in person at their road shows several weeks ago. Too scared of the backlash?

Ron
15 November 2013 #

Hey Guys, good things do come to an end. Businesses need to make profits to survive and writing account software is expensive. Xero do however I think need to be more up front. Promising FREE for a period of time is fine, but users need to know (before they are committed) what the software will cost them at least in the short term

Nigel Moore
15 November 2013 #

Wow, some interesting comments in here to say the least.

Price rises in any industry are a necessary part of sustainability (inflation, value and all that jazz). Yes, I’m sure Xero could have gone about it differently, however whatever path to rising prices they chose will surely have its detractors.

One of my companies was one of the first 10,000 using Xero, I dare say we’ve made many tens of thousands more profit alone just from the efficiencies that Xero has provided in that business. Is that worth an extra $132 per year to me? Hell yes it is!

In reality this is an $11 per month increase for the majority of users. If Xero is not providing you more than an extra $132 worth of value each year with all the new features and efficiencies it keeps rolling out, then you should take a long hard look at where your priorities are in business. Why not turn this into a positive “How can I make an extra $132, or even $1,320, or even $13,200 in my business to offset this?”. Think of it as an opportunity.

For those people saying that they’ll can now just go and use one of the incumbents (and openly admitting that they’ll spend the extra time doing the books) it would be worth doing a little ROI study on what your time is really worth.

Good on you Xero – the price rise is welcome from me as I know I’m getting LOADS of value out of it.

DannyM
15 November 2013 #

I would also like to see employee increase to 5 for standard. We are a simple husband/wife consultancy.

So 90% or whatever of xero customers are using 1 employee (I feel privileged to be in the top 10!). But how many of those that are using more than one employee also use multi-currency and auto-super or storing more than 1 GB of files (or even any)? It’s the oldest trick in the book to “add value” by including services that are not likely to be used.

Why couldn’t the price rise have been kept until after end of financial year as defined in the company settings? Why are there no annual subscriptions offered? As it stands I will likely stay with Xero until June 30 since changing mid-year is a pain (although not too bad given our volume).

QBonlline looks very promising (reports with proper drill down that can be customised and saved! KeyPay payroll integration included!). Sure it’s not *beautiful* but it’s nearly half the price!

Reckon One has a better pricing model (pay for the modules + volumes/functional depth you need) – they just can’t get their product released for whatever reason…

Merry Christmas.

Chris Ridd
15 November 2013 #

@Gary your initial comments about paying 22% more reflect a number of additional posts since I last weighed in to this thread, and that is regarding the Standard subscription only offering 1 employee. I’ve just come off 2 frantic days running 4 webinars to partners (in total about 250-300 participants) and the feedback has certainly been loud and clear on this issue. We have discussed this internally along with 1 or 2 other issues and aim to offer greater clarity on our position with partners/customers next week. Keep an eye out for a blog early next week.
Regarding your comments on Xero Personal, we’ve also had quite a bit of negative feedback from customers who have been faithfully using that product. You may want to check out some of the developments happening with Xero Cashbook if you have indeed been promoting/using Personal to service high net worth clients or indeed for your own use. Some very happy Financial Planners now flocking to Cashbook as a great Income/Expense classification tool with all the benefits of a CoA, reporting, direct feeds, mobile app and open API to integrate cool 3rd party apps like Spotlight Dashboard, PocketRent and Sharesight. A much richer platform for personal finance management than we had ever planned. Check it out by registering for one of these webinars: http://events.xero.com/au/events/633-intro-to-xero-cashbook-for-financial-advisors-online

Chris Ridd
15 November 2013 #

@Sean @Ron
Pricing changes require careful consideration. We could have rushed the message at Xerocon and the October Roadshow and created more questions than answers.

We worked with a number of partners (under non-disclosure) on plan design and changed a number of aspects along the way. We were simply not ready to announce on either occasion. And we continue to monitor the feedback.

Through this blog and the various partner webinars in Australia over the past 2 days where we have answered literally hundreds of questions, I hope most people can see that we are trying our best to be transparent and up-front with our partners.

Bob Harper
15 November 2013 #

I would have thought prices would have dropped as the user base grows. Why not be lower price and better than the competition?

Bob Harper
15 November 2013 #

Just to add, we are!

Gary Turner
15 November 2013 #

@Bob – And very grateful for your custom we are.

I won’t replay the price vs. value argument on here, but to reiterate from a UK Partner perspective, in response to your remark about prices falling – UK Partner prices are actually net down this year; we lowered the price of the (accountant/bookkeeper only) Partner Edition Non-VAT Cashbook by £4 in April, Small is dropping by £3 and Medium and Large are increasing by £1 each.

Hopefully that ticks both your value and price boxes.

Matthew Byles
15 November 2013 #

@Chris – With regards to you comment that it’s not industry norm to offer pricing protection… I don’t believe it to be industry norm to have such stringent restrictions on payroll. I have already had numerous emails with Vijay on the support@xero.com email address so I won’t go on for too long here. However I would like to make the point that the core functionality of a bookkeeping/accounting utility is to provide book keeping/accounting functionality, I believe payroll to be one of those functions. My suggestion would be to keep the three tier system (implement a small price increase if needed) and allow customers who wish to have access to non core functions (eg: file storage) to opt into this as an added “bolt on package” – That would be in keeping with “industry norm” for both book keeping software and SaaS solutions in the greater market place.

All in all you have a great product and I have been a long time customer for my own business and recently recommended Xero to a friend for their needs, as well as bringing in my day job to the Xero family. All three will stay this time. But we will see next you make a change like this.

CM Books
15 November 2013 #

@Gary Turner — appreciate your response. I have no beef whatsoever with the actual price increase. But what does grate is that at Xerocon you & your colleagues set out a pretty clear roadmap for the next 12/18 months, & “forgot” to mention that this was on the agenda.
Precise details would not have been necessary — a simple statement that pricing was under review would have sufficed.
We do our Annual Fee Review for our clients as at 1st Dec, so actually the timing is perfect for us (albeit accidentally). If the announcement had been a month later, then we could have been in the uncomfortable position of having to swallow the additional cost for the next 11 months — I know the amounts aren’t massive, but that isn’t the point.

Deb Hawke
16 November 2013 #

Whilst I have not read every post above I could not find one that adequately answers my question.
Why did Xero limit the payroll on the standard subscription on only ONE employee?

I did read a comment that this was centred around Sole Traders but most Sole Traders don’t operate a company structure or have employees and therefore don’t need payroll at all.

Many small companies have the husband and wife as the ONLY TWO employees, which according to your new pricing means they will now have to pay $60 per month.

Why couldn’t Xero make the Standard Plan based on up to 3 employees to allow these small husband and wife employee businesses to remain on the lower pricing scale?

Rashesh Joshi
17 November 2013 #

Never seen so many comments or complaints about Xero. Agree with some – “pricing is under review” – great point and would fit with Xero’s values.

Guys – Xero is a private company – not a charity – get over it. These are nominal price increases. Agree with Stephen over at Valued – have you ever tried to use Sage’s 0845 numbers ? It sucks!

On to more important points – when can we in the UK start to use the statutory financial statements that lay hidden and dormant and we have to bolt on other stupid software to produce year end accounts – not THAT’S a real game changer – Gold / Platinums – do you agree with me?

David Jenkins
17 November 2013 #

@Chirs Ridd

You say you worked with a ‘number of partners’ in regards to the pricing changes. How many Gold, Silver and Bronze partners did you consult?

Nick
18 November 2013 #

Since the pricing updates revolves heavily around the number of employees – is this feature going to receive a redesign and continual improvements?

As it standards, it’s a very slow and cumbersome system to use when a business with multiple employees – eg no timesheet import feature, the need to create a new timesheet per payrun.

It seem now a business will now be punished for having more people on their payroll, a business employee mainly casual staff are being charged more though the number of “active staff” fluctuates each week. Any insights on how they are will treated?

Susan Bromwich
18 November 2013 #

We’re a small business, just my partner and I. I’m very happy to pay the new fees for the service.

There’s no way I would switch to another product for a few pounds a month – Xero is easy to use, my accountant can give me real-time advise, I have a mobile app so I can check on things from anywhere.

The best part about Xero for me is that I know how my business is performing – I never dread year end accounts, I know how my business is doing way before then – when I have time to make changes if needed. For that level of peace of mind it’s worth every penny.

If your clients can’t see these benefits please show them the features they’re missing out on. Xero is more than invoice processing – I use it to help me drive a more profitable business, maybe they can too.

Richard Wood
18 November 2013 #

Australian partners and customers, we’ve made a change to the upcoming Australian Standard plan to increase the number of payroll employees, given feedback we received here and directly. Please see new post. http://blog.xero.com/2013/11/australia-listening/

GeoffM
18 November 2013 #

@Chris Ridd -
You referred to the use of Xero Cashbook for Sharesight users. Many Sharesight users and other investors use AUD and other foreign currency accounts for dividends and interest. Unfortunately these aren’t supported in Cashbook and the cost of the full blown multi-currency account is not justified for the relatively few transactions that go through these accounts.

Have you considered a cashbook version that includes multi-currency for purposes such as these?

Ben
18 November 2013 #

We’re a 3 man team (1 of which is part time) and we currently pay $49 a month which is expensive enough. On this plan I thought we’d be good until 20 employees and now it’s only 5. Quite disappointed.

I strongly disagree with the comments regarding; we’ve given you so many more features so we’re charging more.
That’s not how SaaS is meant to work, the idea is, you get paid every month and therefore continue to develop new features and support the platform. After all the new features are mainly to attract new customers.

Ashley
18 November 2013 #

I go from paying $768 per year to $960 per year!!!
Not cool Xero

Leanne
18 November 2013 #

Wow!!!!!! That’s enough to make a company re-think! We are currently on $49/mth and are being bumped up to $70/mth! That’s more than a bit rich with no notice! A 43% increase in monthly fees does not justify your comment “At Xero our focus is not on price, it’s on the value we’re providing”. We have not changed anything we are doing but are being hit with a massive increase for no real extra value! As a business we appreciate you need to increase your fees every now and then, but if we did it by 43% I can guarantee you there would be no customers! Good luck Xero, we thought you were the one for us!

Chris Ridd
18 November 2013 #

@ Ben, Thanks for the comments.
There have been many comments in support of the value proposition in our plans on the previous blog so won’t go into the detailed justification. All software vendors put up prices. Some of them see this as an annual entitlement and that is not the approach we want to take here… noting that Xero has not touched pricing in 5 years.

On your point regarding Saas and how it works, there are cost to serve elements that need to be considered which you can’t always absorb into the pricing. Many new features have been added to Xero in the past few years, so there is way more value, and some features actually have a real variable cost such as auto-super and Files. Both are great innovations, both have been very popular with those using them, and both have a cost element to Xero in delivering them.

In the case of most Medium business customers (including yourselves) the price is going up $1 and we’ve acknowledged feedback at the micro-employing end of the market by now allowing up to 5 paid employees within the plan.

Chris Ridd
18 November 2013 #

@ Leanne Take your point, but check out previous comments about the auto-super feature being bundled in to that plan. This is a very useful feature that will drive inefficiencies and was not part of the Medium $49 prior. Most other providers charge this at $1 per employee per month and we think this will be a game-changer for business owners, but will also ensure they are compliant with the ATO’s new SuperStream reforms coming in next year.

Paul
18 November 2013 #

In your email you have stated the justification for increasing the cost to our business is centred around an increase in feature-set. I am not happy to pay more for the imposition of a feature set our business does not need or want.

I have previously contacted you regarding changes to the system which were unwelcome, oversimplified the accounting process and made training staff harder. The response I received to this communication was that there was no intention to change and that the reasoning for this change would become apparent in the future. My dissatisfaction with these changes has not altered.

Despite the package become harder to use, and complicated by a collection of features we do not need, we are being told we will have to pay more to continue using it. I can understand a small increase in charges over time, however we will now be charged double (we will be paying 6 employees – 2 for a handful of hours per week). I am not willing to accept the increase in fees for a what is now a lesser package which is not nearly as valuable to our business than it was when we trialled and selected it two and a half years ago.

I also note that the only additional feature we have been able to take advantage of is payroll, and that we were happy users of the old payroll system. At the time you made a significat deal of the fact that this was a free addition to all users, and so we switched. Now we have a significant amount of data in this module, this is being used as a justification for increasing price – surely you can understand this is not appropriate?

Please understand that I have been, for a significant length of time. a happy Xero user. The product has unfortunately and inexplicably become an over simplified quasi-accounting package which now requires us to train staff in not only fundamental bookkeeping practices, but then also in how this relates to dumbed down Xero terminology.

Given the lack of reasonable justification, I do not expect our monthly charge to change.

Brian Duckworthth
18 November 2013 #

Extremely disappointed with this change! I note that some people have commented on the price increase not being huge in terms of $ Guys it is the percentage increase that is meaningful For my (small) client base that I am trying to build it will result in a price increase of 23% for the smaller and 42% for the larger; in my case the client split is 50/50.
Can I ask Xero how they feel this can be justified. I, as do many others who have commented have put in place fixed price contracts, and only recently (last 6 months) I will now look like a total idiot going back to them and saying I quoted you $49 because you have 12 employees, but this is now going to be $70. They will want me to take them back to MYOB (it’s cheaper with no payroll limit rubbish) . Poor Form Xero

Luke
18 November 2013 #

The starter plan by any measure is a total rip off and is all but unusable any any real business. Why do you guys even bother with it? 5 invoices and bills, it is almost insulting!

And what is with multi-currency be such an expensive add on? It makes no sense in this day and age.. Talk about last century thinking guys! A global company that only offers local pricing options for its users! It is a bad joke!

Darren
18 November 2013 #

Sorry Rod, this it not a great move. The starter option is next to useless,1 employee and 5 invoice/bills per month – for any business that just will not work and then a big jump to the standard plan. So in summery pretty much everyone will get hit with a price hill. Not happy and seems very ill-conceived. You need a starter plan that is realistic in features and cheaper than the current basic plan and a standard plan that is priced the same as the basic plan is now. I have two accounts so am up for a $22 p/m price hike. Not happy at all so I will be searching for alternatives – very unhappy at the way this has been roled out.

Tim Ellert
18 November 2013 #

@Rod, @Chris.

Well done for listening to feedback and fixing the package you offer in Australia..

Now please can you do the same for the UK and comment on the following points:

1) Why charge the small business extra to pay for the big business / partners new features, while they get a price freeze and pay the same as previously?

2) Why not make files a bolt on for only those that want it (as it just not that important to most people)

3) Why not offer a true small business plan which supports 15 invoices and 15 purchases per month? Starter is pointless and Standard is overkill

4) Why not fix the existing big / value features in the UK like bank feeds which are notoriously unreliable and seem to break virtually every month

5) Why not include direct RTI submission to HMRC in payroll so we dont need to use / pay for a third party add on.

6) Why not support your loyal customers of 4 years+ by freezing thier prices too (not just partners) and only applying the new prices to new sign ups (like other cloud companies do)

I have to say when i read the blog comment above about “what this space, we will sort it next week”, i thought great, Xero get it! Sadly by only addressing your home market (Aus), i guess you dont get it. Still feeling very let down and disappointed with Xero in the UK as its NOT great value for money over here.

Look forward to your comments Chris and would love to to get Rod’s comment as well to this post (he seems to have gone awefully quiet since the bad press started)

Come on guys turn this into a positive and move forwards…

Gary Turner
18 November 2013 #

@Luke – Small (Starter) is actually being used by thousands of happy customers. I appreciate that for you it might seem a ludicrously imperfect combination of the most attractive, lowest price point and the least attractive transaction restriction thresholds – but it was deliberately designed and priced that way to address a very specific audience. And our analysis of transaction volumes today still backs up those original threshold choices.

If you need more than Small offers, I’m afraid Medium (Standard) is the product we’d recommend, and is in fact our most popular plan.

carmen portelli
19 November 2013 #

What a blow this is for my small business. We employ 12 casual staff and no full time staff – the total hours our staff work in a week is always under 100 hours – so the 12 casual staff are equivalent to 2 or 3 full time staff. I was so happy with xero but now our fees have gone up a whopping 43% from $49 to $70 per month. This is highway robbery. I know our small business is insignificant to xero whose capitalisation has just sky rocketed to $5billion. I get the feeling that xero has to increase it fees to justify the massive increase in share price its directors are now enjoying. Good luck to you – I hope you make lots of money from your sneaky and dishonest fee hike. You definitely have us over a barrel. You have only given us a couple of weeks warning so even if we wanted to change to reckon or myob online you know it would be very hard for us. Hope xero shareholders and staff have a very happy christmas. By the way, I phoned reckon online today and they told me that we can have unlimited transactions and unlimited number of employees for under $500 per year (about $40 per month) and their new package will be available in the early part of the new year – so please listen to us and make it easier for us to stay with you. There will be many small businesses suffering from this insensitive price hike in xero fees. Please don’t be a greedy organisation and listen to your small customers.

Chris Ridd
19 November 2013 #

@ Paul, just wanted to acknowledge that we’ve got your support tickets and we’ll get back to you on them directly.

Brian Duckworth
20 November 2013 #

Further to my comments above – and Carmens above!

However the option that better suits my client base is http://www.humanservices.gov.au/business/services/medicare/small-business-superannuation-clearing-house/

which accomplishes what you have suggested (in my opinion) and, as far as I can ascertain at no cost. I believe there may be a limit of between 20 and 25 employees that can be on the system for each firm. Again this perfectly suits my demographic.

The following extract from the super web site suggests as below:

From July 2014 all large and medium employers will be required to send contributions in the new format, and all super funds, including self-managed super funds, will be required to receive contributions in the new standard.

All small employers with less than 20 employees must use the data standard for sending contributions from 1 July 2015 (subject to further consultation).

I would suggest that the 1/7/2015 deadline and charging effectively 18 months in advance for a feature that is not required is a somewhat strange course of action – more than 20 employees – yes large company, and start the transition from April 1, 2014 3 months prior to the July 1 deadline; but why penalise our small businesses?

However I still hold to the 23% and 43% increase that I mentioned as being a significant hurdle we need to jump over with our clients; small business clients tend to not consider any savings aspect (which IMO are not significant for my client base) but they do consider the price increase percentages. In today’s economy getting any price increase larger than CPI is difficult…if not impossible and to justify a 43% increase for a feature that is not required per se is foolish to say the least.

On a side note what Xero is doing is what has happened in real estate for years, the agents sell the advertising to the end user (we sell the Xero to the end user); the media groups (print photography internet) put up the prices significantly (like Xero) and say to the agents along the lines of ‘well you don’t pay for it the client does’ , and the changes that they use to justify the increase are not significant to the overall users. This allows them o absolve themselves of all accountability and responsibility because they know that the cost of not using the service will not wash. BTW I am also a Licensed Real Estate Agent and ran my own Agency so I speak from experience with this type of model.

Mike Block CPA
24 December 2013 #

Xero badly needs per employee and per transaction pricing. It is ridiculous to bundle payroll with accounting, so many must take what they do not want to get what they need. This can mean effectively paying $51 to $90 for one extra employee, $40 for e-services for one employee or $21 for one extra bill, invoice or bank entry. PLEASE VOTE for this at http://bit.ly/1evmS4u (after you log in to Xero)

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