Australia, we’re listening

On Wednesday we announced new and refreshed subscription plans. We made these changes to align value globally for new features such as Payroll in the US, varying storage limits for our Files storage feature and in preparation for new services we have planned.

We don’t change pricing often, and around 90 per cent of our customers will have a price decrease or only a $1 or £1 increase. For some of our Australian customers there is a more substantial rise, where we’ve changed our approach of charging by number of payroll employees to be more granular. We’ve therefore raised prices where there are higher volumes of Payroll employees, inclusive of automated super payments, along with higher storage limits.

Where we can help, and are taking immediate action, is with a question that many Australian partners and customers have had about the incoming “Standard” plan only having 1 payroll employee. We know we’ve slipped up and I won’t bore you with the convoluted history of discussion that led to us putting that out there.

So we’re confirming that for the new Standard plan, we’ll make the number of payroll employees on that plan 5 not 1.

We are very grateful for the comments that have led us to reconsider this, and appreciate that for many small businesses with a very low number of employees that have been using Xero with Payroll in Australia it makes sense to keep the transition simple and provide this option.

Another concern that was raised was around how we’ve listed the new plans as having 1000 invoices and 1000 bank reconciliation lines. This was simply a rewording of what we currently have written as “hundreds” and remains a soft limit that we would only enforce if someone’s use was excessive and causing performance issues for others. However, some took it to mean it was now a hard limit so we’ve made that clearer on the pricing pages. We are always working to increase the limits and have a bunch of projects on to raise this in the future. But we believe we cover most small businesses now.

We’ve also heard loud and clear the concerns about the amount of advance notice we’ve given. Unfortunately with the work done and ongoing behind the scenes we are not in a position to change that at this point. Please be assured we do take everything we are hearing to heart.

We are grateful for the many comments in support of what we are trying to do and appreciate the community conversation between those with many points of view. It pains us when we hear suggestions of typical corporate behaviour and it lifts our hearts when we are reminded of how we aren’t like that. We’ll strive to keep Xero a unique software company striking its own path and look forward to rebuilding any love lost along the way for the tougher decisions we make.

At Xero our focus is not on price, it’s on the value we’re providing. We aim to be very competitive but we also really love to deliver great features that make small business more productive and accountants and bookkeepers work more fulfilling. Just a reminder of the path we’re on feature-wise and that you are on with us. Online accounting is a true revolution for small business and we’re just beginning.

If you have any questions about the plan changes in Australia join me on one of our final two webinars this week where I will take you through all the pricing announcements as well as the decision to lift Standard from 1 to 5 payroll employees in Australia.

 

70 Comments

Sandra Hunter
November 19, 2013 at 7:39 am

I think it is a good idea to look at the big picture. Every successful business needs up to the minute financial information to enable it to make good decisions. The accounting system should be the very heart beat of a successful business. Too many small businesses resent paying anything for their accounting system (and their accountant) because they fail to see how vital that information is. When you compare what you pay for Xero each year to your total business turnover you should be able to see that the benefits vastly outweigh the cost. Many businesses spend more on coffee than Xero!

Gary Turner
November 19, 2013 at 7:52 am

@Tim – it’s great that we’ve been able to have this exchange. Being open and debating some of the tougher decisions we make in public is so important, even if outcomes don’t satisfy everyone.

We’ll stick to our guns when we think it’s the right thing to do (for example we think Dropbox is simply one of the worst places for accounting records and documents to be stored from a practical perspective) and at the same time we’ll absolutely respond to feedback when the force of customer argument tells us we missed the mark.

Happy to work to restore your faith. Thanks for giving us the chance.

Mike Block CPA
November 19, 2013 at 7:57 am

@ Tim
Where did you hear, “Silver & Gold Xero Partners have been told that they will not have their pricing increased”? That is news to me.

Mike Block CPA
November 19, 2013 at 8:03 am

@ Tim
If you are right about Silver & Gold Xero Partners have been told that they will not have their pricing increased, then this will be of big interest to anyone not getting Xero at 25% off. I give a 25% discount to anyone who bills Xero through me, even if I do not do your accounting. If I also can get you the old Xero prices, so much the better.

For clients, Xero costs too little to bill it separately.

Chris Ridd
November 19, 2013 at 8:15 am

@ Tim, @ Mike
Not quite correct guys. Silver and Gold partners in Australia will have a period of price protection for any existing Xero customers (as at midnight on 5th December) through to 1st July 2014. This is in recognition of the many who have been on the journey with Xero early and have moved to fixed fee arrangements with their clients. They also have the most amount of exposure due to higher volumes of Xero clients. We felt this was the right thing to do to allow them time to make any appropriate service fee adjustments that they see as appropriate for their customers. So from 1st July 2014 there will be one price plan for all partners. Hope that helps clarify the situation.

Mike Block CPA
November 19, 2013 at 9:01 am

@ Chris Ridd:
Thanks for the clarification. I appreciate why Xero feels this is fair, so I do not mind different U.S. treatment.

The recent Xero Roadshows showed us a far better next generation payroll than any I ever saw, but my BIG major Xero price problem relates to not billing payroll separately, when competitors do so. Many clients (and the new users Xero wants) have no payroll, but now pay as if they did.

Standard 1 – 5 employee plans also omit direct deposit and e-file pay. This will mean many clients have endless time wasting Internal Revenue, state and city notices, plus expensive tax penalties and interest. This often cost me $1,000 per client per year, until I made clients e-file and pay, so Xero should not consider a plan without letting us add this. My many one employee companies can now have e-service for $39 a month (Premium 10), but this will be an UNACCEPTABLE $70 a month in a year. That will mean no Xero at all for many of my new clients.

Bundled payroll also means an UNACCEPTABLE $51 more for the 11th employee and $90 more for the 21st employee. Xero is now cheaper than QuickBooks Online and QuickBooks Payroll for 10, 20 and 100 employee, especially with my 25% Xero discount. However, unless Xero charges separately for payroll, it will be far more expensive for many employee – user combinations.

Mike Block CPA
November 19, 2013 at 9:13 am

By the way, it would be especially ridiculous if I had to pay for a Xero 1 – 5 employee plan, but also had to use a separate payroll service. I will have to do this if Xero’s affordable one-employee plan does not include direct deposit, e-file and e-pay. No one with my experience would ever consider not having these. I also cannot use Xero payroll, or Xero at all, if I know that in a year a one employee company will be $70 a month.

darren hawkins
November 19, 2013 at 10:55 am

How is doubling the price of the software for say 11 employees listening or helping…
This appears to have nothing to do with use of technology. How can 5 or 10 payroll employees be such a burden. Whilst XERO has good features, my price is likely to double, but not my features… Not happy at all with this. Time to re-evaluate the software market. XERO has just lost credibility in my world.

Joel Montgomery
November 19, 2013 at 11:05 am

I have 7 employees so it seems my prices have now increased by $11 / month with no notice. Looks like I am one of the unlucky ones. Xero think it’s OK to jack up prices with no forewarning – not happy.

Gwen Gouveia
November 19, 2013 at 2:02 pm

We have a practice in a remote area with remote clients, where staff are mostly casual and some working as little as 5 or six hours in a week and constantly changing and rotating. In our experience we would hardly ever pay more than the 20 for some or 10 employees in a single pay (smaller clients 5), but in a month it would be more than these limits yet total payroll cost remains unchanged.

It is not only an unattractive selling point, but impractical to attempt discussing reasoning for pricing increase in this instance to our remote business clients reulting only from a payroll perspective having just convinced them to migrate from MYOB (that was not costing them anything due to them not having a local product but using our corporate MYOB solution). Don’t get me wrong, we LOVE xero and the functionality, but for an up to 40% Pricing increase, how do I present this to my clients whom have the same level of “Payroll Expense” as another organisation that can remain on a low cost plan.

Notice period of increases would have been helpful and If Xero payroll is an attractive and identified valued option, can pricing be considered in relation to our example above or perhaps based on ” Total Payroll” expense that is an indication of true organisation size and “Average Full time employees” per month rather than direct “Number of employees paid per month.

carmen portelli
November 19, 2013 at 5:36 pm

Our fees have gone up with xero by 43%!!! We are a small business with 12 casual staff some who work only a couple of hours per fortnight. What is XERO doing about small business like ours with your fees jumping from $49 to $70 with no warning? I expected that fees would stay at that rate for at least a year. I have only been with XERO for 3 months and now I feel trapped after spending many hours setting everything up. I doubt whether they are listening to our concerns. XERO needs to be aware that they are hurting the small operator with lots of casual or part time staff.

DannyM
November 20, 2013 at 11:32 am

In a Australia, for Tax records, supporting documentation needs to be kept for 7 years. I suspect many business keep them longer (especially electronic versions).
If dropbox is “one of the worst” places to store financial documents, then a SaaS repository is not much better! I don’t know if I will be using Xero in 7 months time let alone 7 years…

I don’t think Xero “Files” is a “game changer” but only time will tell…

StaceyS
November 20, 2013 at 4:53 pm

Rather UnImpressed! going form $29 per Month to $50!! & the starter plan is a Joke at only 5 invoices & 5 Bills a month. We will definately be software shopping before december.

Brian Duckworth
November 21, 2013 at 6:40 pm

Is it my imagination or have the negative comments been deleted?

Gary Turner
November 22, 2013 at 7:23 am

Brian – it’s your imagination. Deleting comments just because they’re negative is not our thing. You’re probably thinking back to different comments on the original pricing post last week?

carolyn
November 22, 2013 at 5:59 pm

Our price has jumped from $49 to $70 with no warning – we only signed up last month!!!!!.
The only difference will be auto super which I did not sign up for or need and deliberately chose to go without to keep cost down. now i have to have it anyway.

It still does not handle WET TAX – surely it can’t be that hard to allow me to add an extra tax like i was able to in QB and have it added to the BAS activity statement in the right places.

We bought an add on to handle stock – which QB would handle – we are only small fry so far – So now to go into the “cloud” it is costing $2000 a year.

If it had small stock control and WET TAX I wouldn’t mind but just to pay your employees – that stinks. And from I see its hard to use payroll anyway.

ALSO if you sign up for XERO now – guess what, they are still advertising the $49 medium 20 employees deal. That can’t be legal. The new prices come into effect in 2 weeks.

Don’t get me wrong I love the way XERO works but really for the money I could save QB is still looking alright especially QB online

Tom
November 27, 2013 at 10:27 am

I understand the need for pricing to be reviewed periodically, however I’m concerned that there is now an absolute limit even on the most expensive plan. What happens when you breach the 1,000 limit on transactions, and when you have more than 100 employees? We’re in neither category yet but it won’t be too long. Xero has a focus on small business and owner/operator businesses, but please don’t forget your medium sized customers!

Brian Duckworth
December 4, 2013 at 11:44 pm

Hi There Xero Team,

Yes I agree you are all listening…for my money Xero is the better of the cloud based systems; even though some aspects are a bit agricultural and clunky, IMHO customer service seems to me with the interactions I have had to be amongst the ‘best in show’ well done!

However (yes Chris you knew there had to be a but!) I have just had a look at the ‘new’ packages on the website for Australia. I would suggest that Standard be replaced by the premium 10 and 10 by Premium 20 but keeping the prices at $50 & $60; whilst there is still a price increase it is slight;y more palatable, price would thern jump to the Premium 50 at $80 with up to 50 employees, SME’s at that level would be more accepting at that price range. I would put the starter package with up to 5 employees.

Don’t know whether this make sense – but it does eliminate 1 pricing tier. As many have said selling big percentage price increases to any small business is damn hard.

I would have to express my discontent with the ‘prefered holding of prices for the big end of town – yes they may have more volume but us little guys are perhaps more important as we are closer to the coal face than they are.

Very hard to sell the package and then a month later tell the client – price up by 42% – as someone said above bait & switch leaves a nasty taste in mouth

Cheers All

Brian

Alexia Taylor
January 17, 2014 at 10:36 pm

Well said, Chris Ridd. It was a really good to know that you listening to us and apply on them. That’s was great effort by you. Excellent and keep going ahead like this.

Andrew
January 28, 2014 at 1:33 am

MYOB Live Accounts is only $29/m how can you justify limiting the Xero $25/m to so few transactions and charging $50/m (and higher) for what MYOB Live Accounts gives you for only $29/m.

The pricing seems crazy.

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