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New and refreshed subscription plans

Posted 5 years ago in Advisors by Rod Drury
Posted by Rod Drury

[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.




November 18, 2013 at 2.44 pm

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
November 18, 2013 at 3.48 pm

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

November 18, 2013 at 5.54 pm

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!

Gary Turner in reply to Luke Xero
November 18, 2013 at 11.26 pm

@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.

November 18, 2013 at 8.09 pm

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
November 18, 2013 at 10.34 pm

@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…

carmen portelli
November 19, 2013 at 12.47 am

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
November 19, 2013 at 12.40 pm

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

Brian Duckworth
November 20, 2013 at 5.33 pm

Further to my comments above – and Carmens above!

However the option that better suits my client base is

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
December 24, 2013 at 11.14 am

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 (after you log in to Xero)

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