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Australia adjusts pricing on premium plans, expands payroll for standard

Posted 2 weeks ago in Advisors by Trent Innes
Posted by Trent Innes

At Xero, our teams work hard to deliver tools for your success. We’ve made continual improvements to features such as reporting, payroll and the mobile app. And for three years running, small businesses have named Xero the most-loved accounting platform and the best value for money in Canstar Blue’s annual survey.

Since early 2016, we’ve devoted almost $250 million to research and development including new regulatory compliance such as Single Touch Payroll. We don’t adjust prices often, but we do revisit them from time to time to ensure they’re aligned with the value we’re delivering.

Starting 28 September 2018, we’ll be changing prices to reflect the improvements in Xero and the cost of serving larger subscribers on a per-employee basis.

Most subscribers will see no change in price. Many will find their plan has extra features at no added expense. And we’ve held the line on prices for standard, starter and partner plans.

For the smaller employers, there’s some good news. The standard plan now covers payroll for two employees instead of one, at no extra expense. As small businesses add their first employees, they can be even more confident of keeping costs down.  

Our premium plans will see the biggest change in price. This reflects a rising cost to serve larger employers on a per-employee basis. We believe our pricing remains reasonable in this market.

Payroll continues to be one of the strongest draws for employers on Xero. We’ve enhanced it by adding employment termination payments, the ability to deactivate unused pay items and to support working-holiday employees. We’ve also enhanced the opt-in process for auto-super and now offer super reports with proof of payments.

Expenses reimagined

We also have some exciting news about one of our earliest features, expense claims, which we’ve rebuilt from the ground up. Today we’re announcing the launch of the all new Xero Expenses.

You can auto-capture receipts and submit expense claims on mobile devices, link billable expenses to Xero projects, and update reports. New permission settings allow control over who views, approves and pays claims. Best of all, Xero Expenses provides real-time insight into who’s spending, how much, and on what.

Xero Expenses will be available to existing organisations for free from 10 July through 28 September 2018. After that, it will be available for $5 a month for one user and $5 for every active user after that. Be sure to have a look at it over the next three months.

The old expense claims feature will remain available to claim and pay expenses until 31 January. After that, only historical entries will be visible.

At Xero, we love small businesses and our accounting and bookkeeping partners. When they succeed, so do we. Here is a timeline showing some of the features and improvements we’ve delivered over the past two years.

Thanks for choosing Xero.

FAQS

When will I see the changes on my invoice from Xero?

The price changes take effect for existing and new plans from 28 September 2018 and will show on invoices from this date onwards. Invoices will likely have two lines: the period up to the price change, and the period after the change.

When do the changes come into effect?

The new pricing comes into effect 28 September 2018.

I have a discount or promo code from Xero. Will it be honoured?

If Xero has provided a current discount or promo code, it will continue to be applied to the new pricing from 28 September 2018 until the code expires.

Q: How do I get started with the new Xero Expenses?

From 10 July 2018, under the Accounts tab in your Xero account, you’ll see a new option labelled Expenses. The first time you click on this, you’ll receive an introduction message and be guided through a quick three-step set-up process, including:

  1. Selecting your Xero Expenses users.
  2. Selecting the account codes you want to be able to match expenses claims to.
  3. Accepting authorisation of receipt scanning on your behalf.

164 comments

Taryn
July 11, 2018 at 3.58 pm

You have mentioned the costs of servicing payroll for larger clients as justification for price rises. One of my plan 50 clients does not use Xero timesheets as it cannot record shift start and end times which are required in their industry. No staff are invited into xeroMe as it does not meet their needs. Yet the fee increase applies. Xero timesheets are very basic and not worth this extra charge.

Demian Mclean in reply to Taryn Xero
July 11, 2018 at 5.46 pm

Hi, Taryn. The cost to serve larger employers includes many factors. For instance, there are per-user fees for each auto-super event. There are also are costs to build new compliance tools like Single Touch Payroll, which is now required for every business with 20 or more employees. I’m sorry hear that Xero timesheets don’t meet all your needs. But we are aware of the request for start and finish times, and I’d suggest you add your voice on this page if you haven’t already: https://community.xero.com/business/discussion/433010/ .Thanks again for your feedback.

Xavier
July 11, 2018 at 4.33 pm

Re the number of employees. Does this refer to the number of current employees on the payroll, or does it also include former employees whose records are still on xero but have been terminated. OR does it just refer to employees who would be using the expense system [of which we have nil requirement for].

Jeremy Sutton in reply to Xavier Xero
July 11, 2018 at 5.37 pm

Hi Xavier. For subscription purposes the number of employees is not set by the number of active/former employees, but rather the number of employees paid within a calendar month. In determining which plan you fit, the key figure is the number of unique employees you are paying (posting a pay run for). The number of employees (current and former) in your database is irrelevant and does not impact your subscription. For more information feel free to reach out to our team via support@xero.com. In regards to expense claims if you don’t require it then you simply don’t use it and won’t incur any costs for it.

John
July 11, 2018 at 6.28 pm

No reasonable person objects to incremental price increases across the board every now and then to cover the ever-increasing cost of doing business. It’s the way Xero does it. Every time a price increase is introduced, it’s always disproportionately worn by certain users who happen to find themselves on the wrong side of whatever the new pricing model is. Features they were using for free now cost money, the included number of employees are now not included, and so on. It’s never simply a dollar or two increase across all plans to reflect CPI. It’s always a massive increase for some and nothing for others. That makes partners look bad and undermines client trust in the subscription model. Certain unfortunate users are suddenly hit with increases of up to 50% just to keep doing what they have always done.

Erin Smith in reply to John Xero
July 11, 2018 at 6.39 pm

Thanks John, we’ve taken your feedback on board and your Account Manager has left a voicemail for you to discuss directly. She’ll try again in the morning if she can’t catch you today.

Anita
July 15, 2018 at 3.26 pm

I agree John

I have just logged in to see that Xero will charge an extra $5 a month for expense claims! I’m not a big user so this was using Xero had become marginal at best over the past 4 years. I was an eager, early adopter but I think there have been too many add-ons and exclusions over time.

I think you’ve just made it worth my time to change to Reckon.

Demian Mclean in reply to Anita Xero
July 17, 2018 at 4.39 pm

Hi, Anita. The new Expenses is a vastly improved product compared to the original expense claims feature in Xero. It’s free for existing users until 28 September, and we’d encourage you to give it a try and let us know what you think. We value you as a Xero customer, and we hope you’ll remain with us.

Dan Zylinski
July 18, 2018 at 9.47 am

I agree. I am a small business (1 employee) but I need the Premium 5 account to process multi-currency payments so instead of paying $25 per month I will be paying $55 per month!!

I have only just decided to move over to Xero and am still in Trial mode. This is not what I was expecting!

Demian Mclean in reply to Dan Zylinski Xero
July 18, 2018 at 9.07 pm

Hi, Dan. Thanks for writing in, and thanks for trialing Xero. Just to clear up any confusion, our $25 starter plan has never included multi-currency and is unaffected by the recent price adjustment. The pricing for premium 5 will rise by just $5 a month, which is the first adjustment in over two years. We think it’s a reasonable value, and we hope you will too as you give Xero a try.

Neil Hodgson
July 11, 2018 at 7.22 pm

With all this development on Payroll, I would have hoped that you would have fixed the inability to accrue leave based on more than one Ordinary Time Earnings pay item. This is an absolute must have for anyone in fast food/restaurant industry with so many rated.
Not happy Xero!!

Demian Mclean in reply to Neil Hodgson Xero
July 12, 2018 at 5.48 pm

Hi, Neil. Thanks for the feedback. I’ve passed on to your account manager your suggestion that any future price changes be made on the anniversary of a subscription. As to the feature you asked about in payroll, can I suggest you add your voice to those also requesting it at Xero Community? It’s the best way to let us know what features are most wanted by partners. There are also some suggested workarounds on that Community page that might help in your situation.

Leonard Commins
July 12, 2018 at 1.19 am

I suppose you have to subsidise the cost of trying to get into the US somehow. Charge the Australians and kiwi’s that built the business. Meanwhile Competitors now has bank feeds and is aggressively marketing $2 per month files with 10 payroll employees… superior is one thing, but when the price is that low the substitution effect has to kick in. It also begs the question, are we to expect these price increases every two years?

Demian Mclean in reply to Leonard Commins Xero
July 12, 2018 at 5.49 pm

Hi, Leonard. Thanks for writing in. We don’t have a timetable for price adjustments, but we do review prices occasionally to ensure they’re aligned with the value we’re delivering. We’ve analysed the software market and feel confident that our pricing is reasonable. We value you as a partner, and I’ve passed on your feedback to your account manager.

Heather Smith
July 12, 2018 at 12.49 pm

The Standard plans now offer processing for 2 people.
If a someone with 2 employees moves from Prem 5 to Standard plan (saving $10p/m) – do they also lose the auto-super functionality?

Thank-you,

Heather

Demian Mclean in reply to Heather Smith Xero
July 12, 2018 at 1.25 pm

Hi, Heather! The answer to your question is yes: if you’re on premium 5 and move to the standard plan, you’ll lose auto-super.

Heather Smith in reply to Demian Mclean
July 12, 2018 at 1.46 pm

Thanks Demian – that is what I thought.

It would be good if the Xero blog comments had response notification functionality 🙂

Ann
July 12, 2018 at 3.01 pm

I understand that you can’t fix everything and keep everyone happy all of the time. I agree that probably a key area of focus for everyone is payroll, so it’s great that you’ve worked hard to keep payroll up to scratch.

We don’t use expenses at all in our business, so to me personally, I don’t care about the fan fare on expenses.

One thing that most of us use is batch payments, and I’m sad to see that our complaint has gone without action for a few years now.

When are we going to be able:
1. select invoices to pay over multiple pages (yes there are workarounds, but they all take extra time and effort)
2. “pay” credit notes (ie be able to select them within a payment to a supplier without having to allocate the credit first)?

I refer you to the ongoing community conversation

Many thanks

Demian Mclean in reply to Ann Xero
July 12, 2018 at 7.28 pm

Thanks for your recognition of our payroll efforts, Ann. I’ll pass them on to our software development team in Canberra. I understand how important batch payments is to you. Quite a few factors go into Xero’s decision on which feature requests to prioritise; this article does a good job of explaining them. https://www.xero.com/blog/2016/08/xero-not-building-feature-want/ That said, I’d encourage you (any other likeminded Xero users!) to vote for batch payments in the Xero Community. This sort of feedback lets developers know how important a requested feature is. If I find out any news about batch payments, I’ll be sure to let you know personally, Ann. We appreciate you taking the time to write in.

Clare Hamilton
July 15, 2018 at 11.44 am

Hello,
We have 3 employees- part time ones. We need the premium plan in order to do Superannuation. I fail to see how Xero represents good value for businesses with only 3 employees when I have to pay the price as someone with 50 employees. Now looking elsewhere for software solution.
Disappointed.

Demian Mclean in reply to Clare Hamilton Xero
July 16, 2018 at 12.39 pm

Hi, Clare. Thanks for writing in. If you’re on a premium plan and have only three employees, you should be paying considerably less than a business with 50 employees. Please see the pricing table at the top of this page. If you’d like to choose a different plan, please click the “?” icon the next time you’re logged into Xero, and we can help you out.

Matt
July 15, 2018 at 4.22 pm

Yet again Xero increase the price and remove functionality for small businesses. It might be time to start checking out the competion.

Darren
July 15, 2018 at 10.39 pm

Not happy, Jan!

We are on Premium 5. We will pay $360 more per year consisting of $5 more per month for the base service plus $25 more per month for 5 expense users. Why are we paying more for the basic service when you are killing off a key feature: expenses. This is great news for Xero’s competitors!

Demian Mclean in reply to Darren Xero
July 17, 2018 at 6.07 pm

Hi, Darren. Thanks for writing in. Just an FYI that the first $5 for Expenses covers one user who can submit claims or have claims submitted on their behalf. Then it’s $5 for every additional “active” user, which is a variable charge. So it may be just $20 a month rather than $25, for example. If an employee files no expenses in a month, there’s no charge for that user.

Xero Expenses offers faster expense capture to reduce data entry and more flexible user permissions to give complete control of who can view, submit, and approve or pay an expense claim for or on behalf of someone else. We hope you’ll give it a try while it’s free to you until 28 September.

Leighton Howard
July 16, 2018 at 1.10 pm

My understanding from this is that you are taking a part of the system that is frequently used without problem and is free for all users (expenses), re-vamping it and then charging per user for the privilege. I run a not for profit account and have several people using expenses. I’m not going to pay double to continue using exactly the same services I am using already just because you’ve decided to tweak part of it. As an early adopter of the Xero platform I now find myself in a position where I am looking to get out before the next round of profiteering kicks in at your customer’s expense. A few dollars increase here and there with a bit of shifting of subscription boundaries is acceptable. Taking away an existing feature and then charging $5 a month per user for it absolutely isn’t. It’s been good while it lasted, Xero.

Demian Mclean in reply to Leighton Howard Xero
July 17, 2018 at 6.05 pm

Hi, Leighton. Thanks for choosing Xero and remaining with us these last few years. We don’t want to see you go, and we’d encourage you to try out the new Expenses while it’s free to use through 28 September. Please let us know what you think of it; we’re keen to hear feedback from customers like you. The original expense claims function will also remain available to submit and approve claims until 31 January 2019.

Shana Challenor
July 16, 2018 at 3.53 pm

Am I correct that with 5 on payroll we will be increasing from $60/month to $65/month?

Secondly (and this is what is actually blowing my mind) if my staff want to lodge a receipt/s for reimbursement that they have been doing via their app that this will now cost $5per employee per month? So potentialy if all 5 lodge receipts in one month it will cost us $25 extra bringing our monthly bill to $90???? And is this charged on a month to month basis when and if they lodge receipts? I am really hoping that I am misunderstanding because if not, this price review aka money grab makes xero completely unviable for our small not for profit!

Demian Mclean in reply to Shana Challenor Xero
July 17, 2018 at 6.04 pm

Hi, Shana. You’re correct, the cost for our premium 5 plan will be $65 a month, starting 28 September. And thanks for letting us know how the new Expenses will affect you. You’ve correctly calculated the monthly bill if all five employees were to submit receipts in the same month. But please note that if an employee submits no expense claims, there’s no charge for that extra employee. Can I suggest you try out the new Expenses and let us know what you think? Note too the original expense claims function in Xero will remain functional through 31 January. Thanks for writing in.

Zoe
July 16, 2018 at 6.51 pm

I’m a sole-trader using the Standard plan because I need to reconcile more than 20 bank transaction lines each month.

As a sole-trader with a low-turnover business, I often make business purchases on my personal cards, and then make an expense claim in Xero to reimburse myself from the business account later.

Does the change to Xero Expenses mean that I will have to pay $5 per month, or $60 per year, to be able to make such expense claims after 31/1? If so, that would push my total Xero cost to $660 a year, which is a lot of money for my tiny business. It’s also a big increase, considering I am perfectly happy with the current expense claim system for my sole-trader purposes.

I’m really enjoying using Xero, and I don’t want to change. I simply want to understand if this change is compulsory, and if I will have to pay extra to keep making expense claims in the future.

“Xero Expenses will be available to existing organisations for free from 10 July through 28 September 2018. After that, it will be available for $5 a month for one user and $5 for every active user after that. Be sure to have a look at it over the next three months.
The old expense claims feature will remain available to claim and pay expenses until 31 January. After that, only historical entries will be visible.”

Demian Mclean in reply to Zoe Xero
July 17, 2018 at 6.04 pm

Hi, Zoe. Thanks for writing in. You’ve calculated the cost of Expenses correctly in your case, i.e., $5 a month. But please note the new Expenses has many more features than the original expense claims function in Xero, including powerful analytics to produce a detailed and real-time overview of spending habits and patterns. We hope you’ll give it a try over the next few months while it’s free for existing users and let us know what you think.

Mark
July 18, 2018 at 10.12 am

What a joke! CPI in Australia is less than 2%!
You remove functionality and add cost and then force clients into different subscription levels. Hey ACCC is this price gouging??

My clients are now questioning my decision to recommend Xero. They are now highlighting the cost of your competition, which I must say is now providing a product which is nearly identical for portion of the price.

My clients are now starting to come to me asking why Xero?
My answer? There is no real difference. I am now losing the synergy and will require more work on my end. So I am now saying why Xero? Some serious questions for me to ask about my practice!

Just like MYOB you will become less favoured unless it listen to your customers!

Demian Mclean in reply to Mark Xero
July 18, 2018 at 9.08 pm

Hi, Mark. Thanks for writing in. It sounds like you’re a Xero partner. If so, could you please reach out to your Xero account manager? We take your concerns seriously and would like to address them personally. Alternatively, reply to this comment and give the email address you used when signing up for Xero. We’ll see that someone gives you a call. Thanks.

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