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New pricing plans to help US customers grow with Xero

Posted 1 year ago in Xero news by
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At Xero, we are always looking for ways to innovate to make our platform an even more powerful tool for small businesses and the accountants and bookkeepers who support them.

In the last two years, we’ve devoted almost $250 million in research and development to deliver new features and improved functionality. And in the last month alone, we’ve announced major enhancements, including the acquisition of Hubdoc to deliver on our vision for code-free accounting, and a partnership with Gusto to deliver full-service payroll.

Today, we are taking the next step forward by announcing new pricing plans designed to help businesses grow with Xero. These new plans will take effect on November 1, 2018:

  • ‘Early’ plan (formerly ‘Starter’) is an easy and intuitive solution for businesses that handle a few transactions each month. This plan will be $9/month.
  • ‘Growing’ plan (formerly ‘Standard’) makes it easy for growing businesses to track all business costs and revenue. This plan will be $30/month.
  • ‘Established’ plan (formerly ‘Premium’) has the most comprehensive Xero services, including multi-currency capability as well as time-saving features Expenses and Projects. This plan will be $60/month.

You will be automatically updated to the relevant new plan on November 1, 2018. You can also easily switch plans as your needs evolve.

New features for the ‘Established’ plan

We’re pleased to announce that the ‘Established’ plan will be priced at $60/month, lower than the existing ‘Premium’ plan, which ranges from $70-$180/month. The ‘Established’ plan will also include two exciting new features:

  • Xero Expenses has the tools and insights small businesses need to easily and efficiently track and manage expense claims.
  • Xero Projects is a simple, mobile-friendly, real-time project management tool built right within Xero.

Projects and Expenses will not be charged on a per user basis, allowing customers to continue using these features at the same price as the business grows.

Streamlining work with Hubdoc

We’re thrilled by the positive reaction from the Xero community since announcing the acquisition of Hubdoc, a leading data capture solution that helps small businesses, accountants and bookkeeper focus their efforts on making sense of financial data – instead of collecting it.

Customers on all three new pricing plans have the opportunity to use Hubdoc to help automate data entry work. Small businesses are encouraged to work with their accountant or bookkeeper to understand the best way to incorporate Hubdoc — click here for special offers.

Full-service payroll from Gusto

Our new partnership with Gusto is a direct response to feedback from small business, accountants and bookkeepers who told us they wanted a full featured, full service payroll offering. Gusto delivers this, handling all critical aspects of US payroll administration on behalf of the small business owner, including all federal, state and local payroll taxes.

Gusto will be deeply integrated into the Xero platform and become the core payroll solution for Xero customers in the US. This integration will include features such as single-sign-on, so that customers can seamlessly access their Gusto account using Xero credentials.

Full-service payroll plans are available for a monthly subscription fee starting from $39 + $6 per user. To celebrate this new partnership Xero and Gusto are offering two months of free payroll service: small businesses can enroll here and accountants and bookkeepers here on behalf of clients. If you or your client is an existing Xero payroll customer, the subscriber can log into Xero Payroll and click the banner for more info on how to migrate and take advantage of a limited-time offer.

Helping the growing US Xero community thrive

We’re excited by the progress we’ve made with the Xero platform in recent years. But we’re even more excited about the opportunity ahead. Our new pricing plans, combined with our work with Hubdoc and Gusto, will help the growing community of US Xero small businesses, and the accountants and bookkeepers who support them, continue to thrive.

FAQ

What do I need to do if I am an existing customer?

The short answer is, nothing. Your existing plan will automatically be updated on November 1, 2018:

  • ‘Starter’ plan customers will be updated to the ‘Early’ plan. The price will remain $9/month.
  • ‘Standard’ plan customers will be updated to the ‘Growing’ plan. The price will remain $30/month.
  • ‘Premium’ plan customers will be updated to the ‘Established’ plan. The price will be lowered to $60/month.

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

The price changes take effect for existing and new plans from 1 November 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.

What does this mean if I am currently using Expenses or Projects as part of the Standard or Basic plan?

The free trial for Projects and Expenses for customers on the Standard or Starter plans will continue until December 31, 2018 (customers need to activate the features before November 1, 2018). Customers who wish to continue using these features are encouraged to upgrade to the new Established plan.

Customers who have been using the classic expense claims feature will continue to have access to the functionality.

What do I do if I am currently using Xero payroll?

As we announced on July 20, 2018, we’re winding down the US Xero payroll product as a result of our partnership with Gusto. US payroll customers will be able to use the existing product until December 31, 2018. Log into your Xero Payroll to learn more about how to switch and get access to special promotions.

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

If Xero has provided a current discount or promo code, it will continue to be applied to the new pricing from November 1, 2018 until the code expires.

How does this impact the Partner Program?

We have a partner-specific blog post that covers the new points boost and certification change for the US partner program.  

40 comments

xero customer
August 29, 2018 at 6.31 am

XERO minimum price for running payroll for a small company seems to be going up from the current $30 to $75 (30 xero + 45 for GUSTO payroll). At this level I will drop XERO as a hot potato at the end of 2018. Hope you will reconsider and come up with “grandfathered” plans for your existing customers.

Keri Gohman in reply to xero customer
August 29, 2018 at 7.01 am

Thanks for your comment – we appreciate your feedback. We understand that this is a big change. We are confident that the new Growing pricing plan includes a rich set of features — including unlimited invoices, bill entry, and bank reconciliations — that reflect the price point.

We made the decision to wind-down our existing US payroll product because the majority of customers told us they wanted a full featured, full service payroll offering. Gusto delivers this, handling all critical aspects of US payroll on behalf of the small business owner, including all federal, state and local payroll taxes. Payroll filings and tax payments are also fully automated.

We are offering existing Xero Payroll customers special discounts to make the transition to Gusto as seamless as possible:

Move to Gusto now: Move to Gusto and process payroll before November 1st to receive free payroll through December 31, 2018 AND receive 50 percent off monthly subscription fees for the first 6 months in 2019. With this option, you will work directly with Gusto to set up your new account. Log in to your Xero payroll account for more details.

Move to Gusto after November 1: Move to Gusto between November 1st and December 31st and receive 50 percent off monthly subscription fees for the first 6 months in 2019. With this option, Xero will help you move your data and you’ll get to preview the integration ahead of processing payroll with Gusto starting January 1, 2019.

Sceptic
August 29, 2018 at 6.40 am

So the plan dropped payroll and gained … a new name? Am I missing anything?

Keri Gohman in reply to Sceptic
August 29, 2018 at 7.22 am

Thanks for your comment. Based on customer feedback, we made the decision to wind down our existing US payroll product in favor of Gusto’s full featured, full service payroll offering. We believe that the new plans and their names will help customers select the plan that best meets their specific needs.

YS
August 29, 2018 at 6.55 am

This is a horrible change for small businesses with 1 – 5 employees, as many seem to have commented when it was announced. I’m still not clear about pricing with Gusto. You are taking away “included” payroll from the standard plan and keeping it at $30? Value of Xero decreased immensely right there. Even with initial promotion, using Gutso or other payroll would add significant cost to this segment, especially when you are not reducing your base cost.

Keri Gohman in reply to YS
August 29, 2018 at 7.42 am

Hi Yuki – thank you for your feedback. We understand that this is a big change. We took into careful consideration feedback from our customers who wanted full-featured, full-service payroll. As a result, we decided to wind down our existing US payroll product. It’s important to note that Xero is an open ecosystem, so you will have the option to use the payroll provider of your choice. Should you choose Gusto, after the transition period, the pricing will mirror Gusto’s standard pricing. Full-service payroll plans from Gusto start from a monthly subscription fee of $39 + $6 per user.

Saja Lynn
August 29, 2018 at 8.46 am

Honestly, having the integration is nice for those who want it, but still having the option to do it ourselves would have been nice. Most of the reason I chose xero was because of the free payroll service up to 5 employees. If I had wanted a payroll service I would have just got one on top of xero. Will be researching new accounting software options.

Keri Gohman in reply to Saja Lynn
August 29, 2018 at 9.39 am

Hi Sara – thanks for your comment. We value your feedback, and I’m sorry to hear you’re disappointed. I know that this is a big change. We based our decision on feedback from the majority of customers who wanted a full-service payroll solution. We know Gusto might not be for everyone. I hope you’ll consider some of our other certified payroll app partners. Thank you again for your feedback.

Peter Norton
August 29, 2018 at 9.01 am

What a joke – for small business like us with less than 5 employees, pricing will go up from $30/month to $75 in 2019. Wish I could charge my customers 250% more.
Will definitely drop Xero by the end of the year, no matter the migration costs…

Keri Gohman in reply to Peter Norton
August 29, 2018 at 10.03 am

Hi Peter – thanks for getting in touch. When looking at our payroll offering in the US, the majority of feedback from customers was that they would prefer a full-service payroll solution, which led to the decision to wind down our existing US payroll product – I am sorry that you are disappointed in this decision. Gusto has a rich set of features that handles all the heavy lifting of processing payroll, and I hope you’ll take the time to consider it. Thank you for taking the time to provide your feedback – I appreciate it.

Terrell Sanders
August 29, 2018 at 10.16 am

Today I have accounting + payroll for $30/mo. Under the new pricing I will lose payroll and still pay the same price? Really? I have 2 employees, the new payroll will more than double my costs. I wish I knew about this last year when I converted to Xero, I never would have done it.

Keri Gohman in reply to Terrell Sanders
August 30, 2018 at 4.54 am

Hi Terrell – thanks for getting in touch. First of all, thank you for making the choice to switch to Xero last year. Winding down our in-built payroll was a difficult, but necessary decision given that it wasn’t meeting the needs of the majority of our customers. I understand that the cost of Gusto is a significant change for you, considering you only have two employees, but we really feel that the value that Gusto provides and the time it saves processing payroll, as well as its other great features, are reflected in the price. I really appreciate your feedback and that you took the time to provide it.

D Stephan
August 31, 2018 at 5.54 am

Exactly Terrell, I also just switched to Xero and wouldn’t have made the move had I known this massive price increase was coming down the pike. It’s the classic bait and switch move. Apparently Xero has calculated that that small businesses to won’t switch accounting applications because it’s difficult, costly and time consuming; they better hope their calculus is correct.

xero customer
August 29, 2018 at 10.30 am

The $30 plan with payroll included sets you apart from other providers. You can see that the response to what XERO is trying to pull off is overwhelmingly negative. That is your real feedback..

I’m not sure where you got the feedback from before, but it’s very doubtful that any customer would ask for at least a 2.5x price hike with no option to keep the existing service.

Also are you attempting to switch accounts to the $60 plan:
“No action is needed today. Your existing plan will automatically update on November 1, 2018. ” ?

One option I found so far is WAVE (payroll+accounting for $39 or $24 with “self service” states)
Another is BoA gives a $10-20 credit for Intuit payroll ($36) , if company keeps a certain balance .
Intuit+Quickbooks with no discounts ($59 regular price) is still cheaper than what you are offering for 75.

I used intuit before and will probably go back. Also test driving the wave account.

good luck with whatever you are trying to do XERO.

Keri Gohman in reply to xero customer
August 30, 2018 at 5.15 am

Thanks for your comment. I’m sorry that you’re disappointed. The majority of our customers were asking for a full-service payroll solution, and we weren’t able to offer that through our existing in-built payroll solution. If you are currently on the ‘Standard’ plan, you will be automatically updated to the ‘Growing’ plan ($30/month) on November 1, 2018. Thank you for providing your thoughts on the new pricing plans – I’m sorry to hear that they are not what you wanted.

Michael Susi
August 29, 2018 at 10.41 am

Wow, really disappointed, as a very small business that writes TWO payroll checks a month, I was happy to have a simple all in one solution for my business. Now you’ve doubled my costs and added nothing that I need.
Not everyone needs a bloated tool like Quickbooks, thats why I and I assume many other small business owners came to Xero in the first place.
I am actively seeking a new bookkeeping/payroll solution.

Keri Gohman in reply to Michael Susi
August 30, 2018 at 6.35 am

Hi Michael – thanks for your comment. I can understand your disappointment that we are winding down our in-built payroll solution – it was a product that satisfied the needs of small business owners such as yourself with relatively simple payroll needs. The feedback from the majority of our customers was that they needed a full-service payroll solution, which is why we are partnering with Gusto to provide this. We pride ourselves on having a simple-to-use core accounting platform, and an open ecosystem where users can choose the additional tools they need to suit their business. There are other great payroll solutions out there that have certified integrations with Xero. You can check them out on our App Marketplace. Thank you for taking the time to provide your feedback – it is appreciated.

John B
August 29, 2018 at 2.31 pm

This is a shame. I’ve been using Xero for only about a year. I don’t use the payroll option, but was a beta tester for the new Expenses. Apparently I was beta-testing myself into a higher price tier. While I can probably cobble something together, this effectively doubles my existing cost. I love Xero, but I don’t doubly love Xero.

If you were hearing feedback about a full-featured payroll set, why impose the cost on those who aren’t using it?

When I get some time, I’ll be looking for another solution. I’ve heard good things about Freshbooks. And it looks like Quickbooks’ premium plan is just $30 a month.

Keri Gohman in reply to John B
August 30, 2018 at 6.49 am

Hi John – thanks for getting in touch. Firstly, thank you for your feedback that you love Xero and for beta testing the new Expenses – it’s feedback from customers like you that has helped us create the platform we have today, which is why I appreciate you communicating your disappointment about the new pricing plans. It’s a big change and we need to hear how it affects customers like you. We do believe that the ‘Established’ plan has some great additional features, including Expenses and Projects, and that the price reflects the value of the plan. Thanks again for taking the time to get in touch.

Virginia
August 29, 2018 at 10.36 pm

So 2 things…..
1. I’m confused – if the new pricing plan is going to be $60 why have I been paying $70 since I signed up to Xero in the States?
2. It’s costing me $40 a month just to have multi currency. The standard package is $30 but the multi currency has been removed from that option forcing me (and others) to a much more expensive package for one functionality. How about adding that functionality back in to the standard package?

Keri Gohman in reply to Virginia
August 30, 2018 at 7.30 am

Hi Virginia – thanks for getting in touch. Just wanted to clarify that multi-currency wasn’t previously included in the ‘Standard’ plan. We are dropping the price of the Premium plan (now called the ‘Established’ plan) to better reflect the value of the features that are included – so the good news is that the price of your Xero subscription will now be cheaper. Multi-currency is a valuable tool that saves time for businesses with more complex needs, and we believe it fits perfectly into the Established plan, which in addition also now includes Xero Expenses and Projects.

dan
August 30, 2018 at 2.03 am

I”m with everyone else. I”m a small business and the OLD xero was what I signed up for. I can’t afford or want the new system. way too cumbersome with increased costs for features I don’t need. Sounds like you will be losing customers with this “upgrade.” Sounds like maybe your feedback was a bit off since I was never give the chance to voice my opinion on what I wanted and the rest of the commenters apparently weren’t either. Good look with the changes. Unfortunately its time to shop for accounting software again. you fixed it til its broke.

Keri Gohman in reply to dan
August 31, 2018 at 3.03 am

Hi Dan – thanks for getting in touch. Each plan was developed to meet the needs of businesses at different stages of growth and we believe that Gusto is the best possible experience for our customers for when it comes to processing payroll. I’m sorry you’re not happy with the changes. I want to thank you for providing your feedback as it is important for you to do so as we continue to review our product options to ensure they are a good fit for our customers

Jamie Warrick
August 30, 2018 at 3.44 am

Wasn’t Gusto always an option to be used as an add on all along? If so, then why not leave the payroll the way it is for small businesses. I understand the special promotion that is being offered to switch over to Gusto. However, why would we pay retail to use Gusto with Xero instead of some type of lower monthly fee when you use it with Gusto? I’m a volunteer and we have to find ways to cut expenses. Not only am I going to have to look at other options, but now I will be spending a lot of time switching to something else just like I did switching from QuickBooks to Xero. I have a bad taste in my mouth over this whole situation.

Keri Gohman in reply to Jamie Warrick
August 30, 2018 at 8.39 am

Hi Jamie – thanks for getting in touch. Yes, Gusto has been one of our app partners for quite a few years now. In order to provide the beautiful payroll experience we want for our customers, we have partnered with Gusto and they will become our preferred payroll solution for our US customers. In order to deeply integrate Gusto into our platform, we had to make the decision to wind down our existing payroll product. We believe that the value that Gusto provides and the time that it saves businesses is reflected in the price. I understand that this is a big change – especially if you are volunteering for your organization. Thank you for your feedback – I appreciate you taking the time.

Jamie Warrick in reply to Keri Gohman
September 4, 2018 at 12.59 pm

So I’ve done research on other payroll options. Two that I am currently looking at is payroll4free and ezpaycheck. EZpaycheck costs $99 a year, but doesn’t do direct deposit unless you go through your bank and doesn’t e-file taxes your taxes. Payroll4free has these options but it costs $12.50 per month for each option. Otherwise the rest of payroll4free is free. I am in the process of getting an account set up with payroll4free. Also, talking with their customer service they are supposed to be coming out with their own accounting software which is also supposed to be for free. Payroll4free might be a good option for our business since we only have 3 employees with no benefits. So this might work for us, but might not be a good option for other businesses depending on their needs. Just figured I would share this with everyone. If anyone finds any other good options please share. Thanks.

A. Kenney
August 30, 2018 at 7.02 am

I’m with the rest of you. As an S Corp with one employee–myself–doing my own monthly and quarterly tax reports takes just a few minutes of my time. Now my annual cost will go from $360 to $900 (not counting the discounts, which will disappear after the introductory transition period)–with no added value to me. There should have been an option for the “DIYers” to keep their existing plan. After 3 years enjoying Xero, I’m in search of other solutions.

Keri Gohman in reply to A. Kenney
August 31, 2018 at 3.30 am

Thanks for your comment – I’m sorry to hear you’re not happy with the changes. We really do believe that Gusto provides the best possible payroll experience for the majority of our customers. There are other payroll options on our App Marketplace, so I hope you will consider these. Thanks again for getting in touch – I appreciate your feedback.

Kimball
August 30, 2018 at 8.59 am

The news release states that existing payroll functions will be in place with Xero through 12/31/18. Will the year-end functions (like issuing W-2s) be available after 1/1/19? Thanks.

Sarah Richards in reply to Kimball
August 31, 2018 at 5.08 am

Hi Kimball – thanks for your comment. After January 1, 2019 you will still be able to use Xero Payroll for the prior year, but won’t be able to post anything with a payment date after December 31, 2018. So, for example, if you needed to revert and repost a pay run from October 2018, you could still do that. But you can’t post a new pay run for January or February 2019. If you are also using Xero for filing, you will be able to file for payment dates prior to January 1, 2019 until the end of January when the filing period ends.

David A. Sprott
August 30, 2018 at 9.32 am

I agree with so many of the others who’ve left comments here. Xero is dropping a feature and charging me the same price for their service. Then, to get the service they’ve dropped I’ll have to pay a very hefty additional fee. Yes, I know that they are offering introductory discounts, but I must consider the costs once those discounts expire. Your payroll feature was not the greatest, but it worked very well for the price, and I do not want to be forced to pay substantially more for a service that has features I will probably never use. I cannot imagine who in your organization managed to convince the rest of you that this change would be a good idea. You are going to lose many customers if you do not reconsider, and you should do it quickly. I’m already shopping around.

Keri Gohman in reply to David A. Sprott
August 31, 2018 at 3.44 am

Hi David – thanks for getting in touch. We do hear that for a lot of users of our in-built payroll product it was simple enough to get the job done – but for the majority of our customers, it didn’t have the feature set they needed. Gusto is a much more comprehensive solution that offers features for everyone’s needs. I’m sorry that Gusto isn’t the right fit for your business – thank you for your feedback.

D Stephan in reply to Keri Gohman
August 31, 2018 at 5.44 am

Well Keri, if that’s the case, then leave the base plan including payroll alone and tell those companies who need a “more comprehensive solution” to go sign up with Gusto. Everybody’s happy!

Isabel O
August 30, 2018 at 11.48 am

I agree with all of these comments. Please provide a way for small businesses to continue to use the services as is.

I, too, researched accounting and payroll options, and chose Xero based not just on accounting, but on the low cost payroll integration. I looked into Gusto integration at that time, and was not convinced of their value for a customer like me. Nor am I today.

If we cannot continue to use payroll on the Standard/Growing plan, I’ll either be switching down to the $9/month plan, or switching providers entirely: either way, less revenue for you. I can’t be the only one with few transactions yet payroll needs.

I’m super disappointed with this decision. Again, please consider providing a way for small businesses to continue to use the service as is, or even as an add on (but lower cost than Gusto).

Keri Gohman in reply to Isabel O
August 31, 2018 at 3.55 am

Hi Isabel – thanks for getting in touch. I’m sorry you’re disappointed with this decision. When assessing our payroll offering, we determined that it did not have the feature set needed to service all of our customers. Gusto is more comprehensive and in order to integrate it into our platform, we had to make the decision to wind down our in-built payroll product. If Gusto isn’t the best choice for you, you can take a look at our other app partners here. I hope you find a plan that works for you and I’m sorry for the inconvenience – I know this is a big change.

D Stephan
August 31, 2018 at 5.44 am

Wow. Can’t really say it any better than the others who’ve already commented; this is a giant rip-off that you’re trying to spin as some kind of “Upgrade”. This is the same crap that Intuit started pulling as soon as they reached critical mass. Increasing your price to your customers by 150% without providing any additional value is definitely “NOT Beautiful Business”. If I have to pay for an outside payroll service then I’ll be transitioning to Wave Accounting.

Keri Gohman in reply to D Stephan
August 31, 2018 at 9.10 am

Thanks for your note – I’m sorry you’re frustrated about the change. A lot of consideration and thought went into it and we truly believe it delivers the best possible experience for our customers. Thanks again for passing along your feedback.

Chip Keen
August 31, 2018 at 5.57 am

I started using Xero just recently for a small business that my wife and I are running in our retirement. In the past, I’ve been a software developer for an application with sales in the US, Canada, and Mexico that included double-entry accounting and basic payroll. More recently I’ve been a senior product manager for web-based business management applications.
I have a suggestion. I suspect the reason management wants to drop the existing payroll system is because it’s the most expensive feature to support. If so, why not charge for payroll support as a separate product (say, $150/hr) and allow current customers who are happy with it to continue to use it? New users would have the option of subscribing to Gusto or using the “basic” payroll included with Xero, which would require that they either figure it out using the existing support documentation, or pay a hefty fee for one-on-one support. Xero would have an additional profit center based upon an already-amortized feature, and would stem the tide of irate customers leaving for other products, bad-mouthing the company as they do so. Really, as a product manager, this is a disaster.
Personally, I intend to take Xero up on its offer to try Gusto for free, for which I thank you. I might find that it’s entirely worth the extra dollars. If not, I’ll do payroll without Xero unless the old system is still available.

P.S. I’ve seen nothing in the app partners page that satisfies the need for an affordable basic payroll module. Continuing to suggest otherwise is fatuous.

Keri Gohman in reply to Chip Keen
September 1, 2018 at 4.02 am

Hi Chip – thanks for choosing Xero. I appreciate your feedback and your insight into the accounting technology world. Charging for product support is not something that we plan on doing. We want to be able to provide quality, timely support to our customers for no added cost. I’m glad to hear that you intend on trying out Gusto – I hope you and your wife will find it to be a great payroll solution for your business.

Ben Richmond
September 1, 2018 at 11.02 am

Thank you for all of your comments. I wanted to take the time to address some of them and start by saying – we understand the impact of this decision for a small group of our customers with smaller payrolls that our in-built US payroll product was working for. We are proud of the payroll services our Xeros built, but the reality was it didn’t have the features that everyone needed. It wasn’t available in all 50 states and the largest share of our customers were wanting full-service 50-state payroll. These were the main reasons that, after a long period of consideration, we made the hard call to shut our payroll down and form a strategic partnership with Gusto – while still continuing to grow our ecosystem of payroll partners.

We wanted to give you plenty of time to assess Gusto and the other options out there. That’s why we’re committed to keeping Xero Payroll open until the end of the financial year – giving you enough time to complete final tax filing needs. We appreciate that after investigating Gusto and the other ecosystem partners available, you might have to make a decision about Xero and whether it’s the right platform for you moving forward. The team and I will be watching and discussing all the feedback. Please email me at ben.richmond@xero.com if you’d like to chat through it further.

Cheers,
Ben Richmond
VP, Business Growth, Americas

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