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.

 

 

186 Comments

Sarah Bishop
November 15, 2013 at 11:10 am

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
November 15, 2013 at 11:31 am

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
November 15, 2013 at 12:39 pm

@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
November 15, 2013 at 4:18 pm

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
November 15, 2013 at 4:34 pm

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
November 15, 2013 at 4:43 pm

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
November 15, 2013 at 5:37 pm

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
November 15, 2013 at 7:54 pm

@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
November 15, 2013 at 8:07 pm

@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
November 15, 2013 at 8:35 pm

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
November 15, 2013 at 8:36 pm

Just to add, we are!

Gary Turner
November 15, 2013 at 8:47 pm

@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
November 15, 2013 at 8:53 pm

@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
November 15, 2013 at 10:09 pm

@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
November 16, 2013 at 12:14 pm

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
November 17, 2013 at 2:12 am

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
November 17, 2013 at 5:58 pm

@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
November 18, 2013 at 3:34 am

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
November 18, 2013 at 4:00 am

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
November 18, 2013 at 11:36 am

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
November 18, 2013 at 11:56 am

@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
November 18, 2013 at 12:14 pm

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
November 18, 2013 at 12:39 pm

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

Leanne
November 18, 2013 at 12:44 pm

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
November 18, 2013 at 2:10 pm

@ 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
November 18, 2013 at 2:14 pm

@ 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
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

Luke
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!

Darren
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…

Gary Turner
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.

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 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
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 http://bit.ly/1evmS4u (after you log in to Xero)

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