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Changes to standard and premium pricing plans in Australia

Posted 2 years ago in Xero news by Trent Innes
Posted by Trent Innes

First up, thanks to the small businesses, bookkeepers and accountants who’ve joined the Xero revolution. We couldn’t have got this far without your support. You chose Xero because you wanted a better way of doing business, and we’re working hard to deliver innovative new features, partnerships and products to you.

Creating and implementing game-changing ideas is what drives and inspires us. And it’s not just talk – Forbes ranked Xero as the World’s Most Innovative Growth Company in 2014 and 2015, and we were BRW’s Most Innovative Company in 2014.

We’ve channeled over $100 million into the Xero platform in the last two years, made hundreds of product updates, and added powerful new features and integrations. Because Xero lives online, updates and new features are delivered automatically – unlike the clunky and expensive upgrades required for desktop software.

Innovative payroll for small business

Processing payroll can be time-consuming and complex – basically, a major headache for business owners.

Payroll in Xero makes it easy to manage your payroll from anywhere. It saves hours of administrative work and lets you lodge reports with the ATO – all from within Xero. Your payroll data automatically appears on your general ledger after a pay run to help keep your accounts up-to-date.

Payroll has rapidly evolved with significant updates in the last two years. Here are some of the recent highlights:

  • Seamless and compliant superannuation

Auto-super on premium plans automatically makes contributions to different super funds for your employees. Xero’s auto-super is gold-level certified for SuperStream, the ATO’s new superannuation payments standard. All businesses need to use a SuperStream compliant service by 30 June 2016.

  • Mobile app that cuts the paperwork from leave requests and payslips

With Xero Me, our app for payroll users, employees can request leave and managers can approve or decline it – all from their mobile. Xero Me saves on administration because employees can view their pay history and submit timesheets from anywhere.

  • Pay out unused leave when employment ends

Save time and hassle by processing final earnings, unused leave balances and any redundancy payments in a single pay run. Increase accuracy because tax on unused leave is calculated automatically.

  • Easily view and manage leave

It’s now simpler to view accrued leave and opening balances, and leave requests are automatically included in applicable payruns.

And we’re not stopping there

We’re committed to constantly improving what we offer our payroll users. Here are some of the features we’ll launch in the coming months:

  • PAYG and withholding tax will automatically appear in the current activity statement
  • Bonuses and commissions will be supported
  • Employment termination payment summaries can be produced and lodged with the ATO from Xero

Plus there’s much more in the pipeline.

Adjusting prices to reflect greater value

We’ve reached a point where our prices no longer reflect the strength of payroll and what’s to come. For these reasons, we’ve adjusted the prices of our plans in Australia.

From 2 June 2016, our pricing plans for all existing and new subscribers will be:

52233_AUPricingRefresh_Table(1)

The biggest change is to the standard plan, where the limit of payroll employees reduces from five to one. For businesses with two to five employees, we’ve introduced a Premium 5 plan. Premium 5 has up to five payroll employees and the advanced features of auto-super and multi-currency, for $60 per month.

If you’re on a standard plan and do a pay run for more than one employee in May, you’ll be switched to the Premium 5 plan on 2 June. Otherwise, you’ll remain on the standard plan.

Existing and new premium plans will increase by $10 per month. If you’re on Premium 10 for multi-currency and haven’t ever done a pay run in Xero, you’ll be moved to the Premium 5 plan on 2 June and won’t have a price increase.

There are no changes to starter or partner edition plans.

No matter how this pricing change affects you, it’s a great time to review your needs and make sure you’re on the Xero plan that best fits your business.

Like to know more?

For more information about the price changes, see our answers to FAQs, and feel free to ask questions in the comments section of the blog below. If you have further questions or need help, please contact the Xero team support@xero.com.

Thanks,

Trent Innes

Managing Director – Xero Australia

191 comments

ABell
March 23, 2016 at 11.43 pm

Have you locked further comments on this topic? I composed my thoughts in a reply this morning, but it has not appeared…

Megan Firkin in reply to ABell Xero
March 24, 2016 at 4.31 pm

@Adrian, no we haven’t locked comments on this topic. I have asked Trent to reply to your comment. He is travelling at the moment however so it might take a few days with Easter etc. Like the Pantene advertising, it won’t happen overnight but it will happen. Warm regards, Megan

Julieanne
April 1, 2016 at 8.39 am

Yes, can only see 1 or 145 comments?

Donald
April 3, 2016 at 12.56 pm

Theres a blue arrow pointing to the left that says previous comments that leads you back to more posts from people just scroll down a bit more to see it =-)

Jason Ale
March 31, 2016 at 1.21 am

The biggest disappointment is not the price rise, but the reduction in payroll to 1 on the $50 plan.
I would suspect that Xero would have got a lot less negative comments if that hadn’t happened, most businesses with 5 employees wouldn’t have any use for multi-currency.

Marina Holmes in reply to Jason Ale Xero
April 5, 2016 at 3.44 pm

@Jason We have worked closely with a number of businesses, accountants and bookkeepers to ensure we make the right product and pricing decision for our customers. We’ve also introduced the Premium 5 plan to cater for businesses with two to five employees so we’re offering flexibility to only pay for what you need. We’re listening to all feedback though.

Wendy Landon in reply to Marina Holmes
April 26, 2016 at 11.32 pm

How about listening to and working closely with the customers. I feel I have been lured by a 25% discount for the first year, and now will have to pay almost double. In my situation you have reduced your supplied service by 80%, imagine if your customers decided to pay you 80% less, I imagine you wouldn’t be happy. Very very unhappy.

Trent Innes in reply to Wendy Landon Xero
April 28, 2016 at 5.33 pm

@Wendy happy for you to reach out to me directly at trent.innes@xero.com.

Nathanael Forster
October 28, 2016 at 7.07 pm

So true

Leon
April 1, 2016 at 12.06 am

Our accountant recommended Xero and I have yet to subscribe.
My partner and I have just started a company and the starter pack would do us except for the single payroll.
Interesting comments by existing customers and I must that they do have some merit however I can also understand the Xero perspective
I have worked as a technical product manager for an international software company with a global user base of tens of thousands of users.
Functionality as requested by the user base is what keeps software relevant and if focused on the mass appeal, customers should be happy and loyal.
Dont know if Xero have published a road map and a list of implemented enhancements and the number of bugs fixed. This information would be useful and perhaps will pacify some.
Regarding $10 price increase, as a percentage its 20%. It is often useful to consider would you be happy with a x% pay increase (or alternatively a x% pay decrease), increasing your market share by x% (or alternately losing x%). Double digit percentages increases are huge.
Appears that customer base has been analysed and segmented and the majority of user base are small businesses with less than 5 users.
What is appealing about Xero is that cloud based, interfaces into Reckon software and Capsule CRM, online tutorials and support.
Its month end, so I had better get back to invoicing the old school way – lined paper and pen.

Marina Holmes in reply to Leon Xero
April 5, 2016 at 3.45 pm

@Leon Thanks for the feedback.

Julieanne
April 1, 2016 at 8.40 am

I need to print out Payment Summaries – report not working?

Marina Holmes in reply to Julieanne Xero
April 5, 2016 at 3.31 pm

@Julieanne Are you still having issues with printing out the Payment Summaries?

Steve
April 1, 2016 at 4.40 pm

I am a lone trader with a book keeper and need to move from 25/month to 60/month which is a massive hike for no real benefit.

Furthermore it is my understanding that your plans are significantly cheaper in the US, around 25% for the standard plan. How do you justify this?

Marina Holmes in reply to Steve Xero
April 5, 2016 at 3.42 pm

@Steve Appreciate your feedback. Xero is in over 185 countries and we set pricing on a regional basis. At this point in time, only Australian plans are changing.

Donald
April 3, 2016 at 1.17 pm

Also Megan I hate to point this out but your companies last email to, well, me at least and others at most, called “How to reach more customers online”, it has a link that I would like to point out.

“Let your customers do the talking”, is what it says. Now I know its not quite in the context as what has been talked about here. But the higher ups need to recognize that by limiting the starter pack they are limiting their income. I read somewhere earlier in these posts you said that Xero has 250’000 customers. I would imagine that’s in Australia only. How does that compare to the 1.2 million customers MYOB states it has in Australia. Doesn’t your company want more of that pie.

Xero needs to recognize they are missing out on millions of dollars a year with the limits they have imposed on the starter pack and standard pack. (Removing payrolls in standard).

People are talking but its not in a good way.

Marina Holmes in reply to Donald Xero
April 5, 2016 at 3.35 pm

@Donald We’re sorry that you feel that way. Happy to discuss in more detail, feel free to contact myself marina.holmes@xero.com or MD Trent Innes trent.innes@xero.com

Donald in reply to Marina Holmes
April 8, 2016 at 12.11 pm

Hey Marina.

Listen Im not mad, I’m not angry. I’m sad that the company doesn’t understand.

I’m sad that MYOB does. (I really can’t stand how they ring me and bug me).

The conversations here, should not be hidden away in private emails. It comes across as dishonest and exclusive. For all I know you could be offering special deals to these people. (I’m sure your not but you see what I mean). I think you should all stop doing that.

I really don’t understand why you wont increase the price by $5 and increase the reconciliations and invoices and bills to a reasonable number.

Again MYOB $10 more a month and they give 400 reconciliations and unlimited invoices and bills. And their Essentials online isn’t too bad. Not as good as Xero but coming along and I would imagine they are going to improve as they go along just like Xero did. Again I don’t want to move. I want to stay but you have to improve the conditions of the Starter Pack.

Also. One of your “partner plans” called non-gst cashbook is $15 and gives unlimited reconciliations. What gives. If you can do that for that plan you can do better for the “Starter Plan”.

Well you have 2 more weeks left till I choose to stay or switch, so the 22 of April needs to have an answer one way or the other to the people who want to know. If I haven’t heard an answer I’ll be off. I think others will too.

Shaun
April 20, 2016 at 8.32 pm

20% increase for small 2-5 employee businesses. Seems excessive. Larger companies have same $10 (smaller overall % increase).
$5 (10%) would have been fairer.
Obviously now your market share has increased (with customers converting) its a tougher decision to change again.
I think this will tarnish your good name going forward.
Just my 2c worth….

Megan Firkin in reply to Shaun Xero
April 20, 2016 at 9.09 pm

@Shaun, thanks for the feedback and rationale, unfortunately there is no easy answer as every company is unique and size isn’t necessarily an accurate measure. In the end, we felt it was fairer to go with what we have. Warm regards, Megan

Bradley Smith
April 26, 2016 at 12.23 pm

The problem with the price rise and all the pricing packages is that now the self called ‘beautiful’ software company is becoming the ‘beautifully’ complex pricing model company.
So the pricing model that used to be fairly easy to explain to clients is now becoming far more complex to explain to clients.

Lyn Morehouse
April 26, 2016 at 12.32 pm

What!! You are increasing my subscriptions, you say you are listening but I would suggest hat the management of Xero has cotton wool in their ears.

People are crying out for telephone support and you ignore them yet you hike the prices or what I consider to be a product that is not a patch on MYOB. Your arrogance astounds me.

Marina Holmes in reply to Lyn Morehouse Xero
April 28, 2016 at 5.40 pm

@Lyn @Bradley We’re sorry you feel this way. While we do work hard to build the best possible user experience, there’s a significant amount more going on under the bonnet in Xero when it comes making value comparisons with other competitor products. Please be assured that we’re committed to continuing to invest to deliver the best value for our customers for what they pay for Xero than any vendor in the marketplace.

Kate
April 26, 2016 at 1.13 pm

Can i ask if its just the payroll numbers now that define what plan you are on and not the transactions?

I do more than 10 transactions a month but have no employees. Just confused about if i’ll be on standard or starter.

Trent Innes in reply to Kate Xero
April 28, 2016 at 5.50 pm

@Kate the only changes we made were in relation to payroll users in the standard product. The limits on the starter plan remain the same.

Deepesh
April 26, 2016 at 1.23 pm

Looks like Xero is going MYOB way ….increase price when ever they can….with no additional meaningful benefits 🙁
No different than MYOB ..anymore I guess…

Marina Holmes in reply to Deepesh Xero
April 26, 2016 at 7.09 pm

@Deepesh We’re sorry that you feel that way. A huge number of the developments delivered in recent times have been focused on delivering measurable time/cost savings so it might be worth looking into some of our free training resources such as Xero U (https://www.xero.com/au/training/) to make sure you are getting the most out of your subscription. We delivered over 500 updates last year alone.

Terry Smith
April 26, 2016 at 1.44 pm

Hi Megan
My first post on xero blog and I have to say that Xero are really missing opportunities here with the less than satisfactory pricing around the “Starter Pack” pricing. I have to agree with Donald that it makes it hard to convince a potential customer to move from MYOB, QBO and Reckon when your starting point is $50???
I have raised this issue with Ann (my ex account manager) many times… by phone, Xero Roadshows, email etc and it all falls on deaf ears, not to mention the same Company standard rhetoric. Your not listening to your partners who are really concerned in regards to the starter pack and it does defies logic when the “Partner Plans” can be done at $10 and $15, but you cant change the “Starter Pack” to a price and high functionality that maybe comparable and make it easier to move people to a superior product with out worrying about the cost as a deal breaker. 20% is rather steep and could be consider of taking advantage of you position in the market!
It appears i am not the only person who thinks this so i have to ask “Who are you talking to, for a fair assessment of this argument.”

Marina Holmes in reply to Terry Smith Xero
April 28, 2016 at 5.34 pm

@Terry We have consulted with a number of accountants and bookkeepers to understand the administrative overhead associated with the changes and to ensure we make the right product and pricing decision for our customers.

Peter
April 26, 2016 at 2.02 pm

Fairly typical….get many small businesses totally reliant on your product and then up the price.

With the total amount of subscribers coming on board you might think the costs for Xero would be reduced not increased.

As efficiency and costs of delivery of the product are improved then the costs associated with the delivery of these services should decreased not increased.

If I dictated a 20% increase to my Customers without any real justification I would see many depart.

With bank rates and CPI so low in Australia what is the justification and is it worth the negativity associated with an excellent product.

Peter

Ariel
April 26, 2016 at 4.23 pm

I definitely see the need for better small business/sole-trader plans. The $25 starter plan is far too limiting – while I understand the increases particularly for the plans that are focused on payroll – the cheaper plans need a quick overhaul so that they appeal to our smaller clients.

Some suggestions:

Starter = $25
Unlimited invoicing, bills and reconciliation.
No payroll

Standard = $40
As above +2 payroll

Premium 5 = $55
5 total payroll and all other premium benefits

Premium 10 = $70
as planned

Premium 20 = $80
as planned

and the others as planned.

It’s hard to advocate for Xero (the only system we advocate for) when it is hard to appeal to our smaller clients due to the pricing limitations.

Thanks so much for reading!
-Ariel

Marina Holmes in reply to Ariel Xero
April 26, 2016 at 7.15 pm

@Ariel Thanks for taking the time to comment. We’re listening to all the comments and taking it on board.

john jackson
April 26, 2016 at 4.59 pm

As your market share has increased so has you grab for fees, the five employees was the reason the client went with xero compared to other packages but will now have to reconsider due to the cost increase, this is really only price gouging, what onter changes are you going to make to sqeeze fees from clients

Marina Holmes in reply to john jackson Xero
April 26, 2016 at 7.14 pm

@John We have worked closely with a number of businesses, accountants and bookkeepers to ensure we make the right product and pricing decision for our customers. We’ve also introduced the Premium 5 plan to cater for businesses with two to five employees so we’re offering flexibility to only pay for what you need.

Matthew
April 26, 2016 at 8.39 pm

I would hope that the discount of 25% for 12 months that I signed up for will be honoured. I started with Xero 3 months ago, so still have a further 9 months at the discounted rate.

Also, you say Australia is the only place with plans changing. I see a post that plans in the UK are also changing, but for them it is only the price. At least they are honest enough to claim it as the price gouge it is, rather than paint it as an advantage to customers like me who are now paying more for the same features

Trent Innes in reply to Matthew Xero
April 28, 2016 at 5.36 pm

@Matthew absolutely. Your sign on promotion period will be honoured.

Jo Grist
April 26, 2016 at 9.59 pm

Hi

I am afraid I have to say something along the lines of what others have been saying. For me with just 2 employees and I have already set up my super stream through ATO and I don’t use multi-currency, I am finding it hard to see the added value this $10 extra a month will bring me. I know you said you have spoken to some accountants etc, but you didn’t actually speak to your users before introducing this change.

I changed from quickbooks online to Xero, as this seemed like a better product for the price. With the leaps and bounds Quickbooks online have come on in the last 12 months, Xero seem to have done very little other than increase the price, it is tempting to switch back.

As previously users have expressed I think a $5 price increase would have been fairer for small businesses like myself. It would also have been good to get some feedback from us the users (like you are often recommending we do in your emails), not a select group. To be honest it doesn’t feel like we mean anything when you introduce a change like this.

Is there anyway you can reconsider this increase especially for small companies?

Edward Bracey
April 27, 2016 at 1.52 am

Have you considered small business that employs a number of casual and part time employees, such as a coffee shop which is not turning over big dollars but may have 10 staff on the books and now has to pay $70 month? this is making Xero a very expensive option in that case…

Marina Holmes in reply to Edward Bracey Xero
April 28, 2016 at 5.47 pm

@Edward @Jo
We regularly consult with our partners and customers to garner feedback on our product roadmap and pricing decisions like this. We release significantly more feature and updates than our competitors and need to ensure our pricing matches the value we deliver. We hope that you continue to be a Xero customer.

Damian
April 27, 2016 at 3.51 pm

A good product, but your value proposition started out on the wrong side of good several years ago, and has only gotten worse – price has now more than doubled, for no increase in value (to me), and thus no change in how I use Xero.

Worse, the practice of increasing the price and reducing the value has gone beyond a trend; price increases for the same (or reduced) level of service are now simply what I expect from Xero, no longer what I worry that Xero will do (again).

I want to like Xero, but you don’t seem to have any customer loyalty. In return, I can assure you I feel no brand loyalty.

Marina Holmes in reply to Damian Xero
April 28, 2016 at 5.30 pm

@Damian & @Peter Thanks for your feedback. We have invested over $100 million on our platform in the last two years and delivered a huge range of new features that make it easier to do business. Payroll, in particular, has evolved rapidly with over twenty updates. We appreciate nobody likes paying more for something one day after the next and we wouldn’t make a change like this recklessly – but please be assured that we’re committed to continuing to invest to deliver the best value for our customers for what they pay for Xero than any vendor in the marketplace.

Jon Bell
April 27, 2016 at 7.20 pm

It would appear that “payroll count” is being used as an indication of “ability to pay”. In my case, I have lots of casual students who do a few hours each fortnight; the Full Time Equivalent count is less than 10 but I have to pay for 20 and soon 30 because the limit is based on a monthly count, not per Payrun or per Dollar size of payroll. My business is certainly not expanding at the same rate as my payroll count.

Maybe mine is an isolated case, but it’s looking more and more like Xero is not the product for me. Pity, ‘cos most of the bits I do use are quite good but I’m apparently having to pay for more and more features I don’t use.

Trent Innes in reply to Jon Bell Xero
April 28, 2016 at 5.31 pm

@Jon Appreciate you taking the time to comment. It is a generally accepted industry practice to charge incrementally based upon payroll usage. The primary reason for this is that there are variable costs to payroll. You can increase and decrease your plan each month dependant upon the number of people you pay each month.

Donald
April 28, 2016 at 4.38 am

Guys. They are allowed to put their prices up. You don’t have the right to say don’t. If what I have read they haven’t put their prices up since 2013. That’s 3 years ago. So per year that’s 3.33% which is quite within reason.

How many of you have had a pay increase in that time? How many of you have had to pay your employees more to match the award wage?

Don’t have a go at them for putting the prices up. They have a right to earn money to pay their employees, which by the way would have a pay increase each year as well.

What you should be complaining about is the features removed from standard or missing from starter to be competitive.

I found another company that “I reckon” one set of unhappy customers might find good. They charge for what you add to the core program. And their light version has 100 reconciliations per month. It also really reminds me of the customization Xero has on the front page but with even more in the addons.

Search around online, I Reckon you will find the One you are looking for.

I’ll be moving to it. I think my accountant will be recommending it as well to their clients.

Trent Innes in reply to Donald Xero
April 28, 2016 at 5.26 pm

@Donald Thanks for taking the time again to respond to the recent blog posts. We have worked with many small businesses, accountants and bookkeepers to ensure we have the right product and pricing decision for our customers. We accept that some people may prefer a lower cost solution and the trade-offs that brings. We would love for you to remain a Xero customer as we do believe we offer great value.

Steve Perkins
April 28, 2016 at 9.17 am

I’m sad to see this notification on the pricing tab as I was about to upgrade my free trial to standard as a new user this morning. I have found several limitations in the Xero platform as I try to shift from a traditional version of QuickBooks Premier which has none of the imposed maxims for about the same $700 per year subscription, oh and I can run my multiple companies….

Your blogs have dismissed granular customer cost tracking (to invoice) as a feature that is “not on the immediate radar” and sadly now as I go to select a $60 standard plan I find I’m now forced to put my hand in my pocket for another $120 per year as we grow our staff in the coming month.

Being in the IT Cloud hosting business, we are completely aware that there is NO added additional cost to Xero processing those extra 5 pays from a technology perspective, if your 3rd party super clearing house is greedily increasing their cut then I suggest Xero negotiates that down based on economy of scale.

So on the previous point, when are we seeing a price reduction to account for economy of scale as you grow market and also shared efficiency gain as you mature and streamline your business to reduce development and operation inefficiency?

I’m off to free trial your competition now, you’ve left me no choice.

Sincerely ‘unimpressed’.

Trent Innes in reply to Steve Perkins Xero
April 28, 2016 at 5.22 pm

@Steve Thanks for taking the time to respond to the blog post. We would love to have you as a Xero customer. Changing pricing is never easy and we have not changed it for 3 years. During that time we have added many new features and functions including auto super which this price adjustment is targeted at. We believe the efficiencies this brings to our customers far outweighs the price change.

Chris
June 2, 2016 at 1.16 pm

I dont mind a price increase if it saves me time.. like how about being able to lodge our bas directly with the ATO instead of double keying data like what was promised 6 years ago in 2010?:

https://www.xero.com/blog/2010/03/xero-and-sbr/

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