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And so the price hikes start.....

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Just received an email from Xero with price hikes for their main software subscriptions. 

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21st May 2019 10:31

have you seen their accounts.... not surprising is it...

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21st May 2019 10:54

I’ve not yet - care to share?

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to atleastisoundknowledgable...
21st May 2019 11:15

https://www.xero.com/blog/2019/05/uk-price-change-2019/

Its a 10% hike, so looking really expensive now, but as ever its a pain to switch so they have you by the balls.

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By johnt27
to ireallyshouldknowthisbut
22nd May 2019 15:20

It's a pain but not impossible. The barriers to change on cloud products are extremely low and Xero et al are well aware of this.

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21st May 2019 11:29

Luckily, I warned clients that whatever system they chose they would probably be cornered to some extent when the inevitable price rises took hold, which is why we have only suggested cloud systems to those that will gain benefit beyond simply MTD reporting.

Even I didn't think they'd hike in Month 1 of MTD - I can't imagine every individual business has chosen their system yet! Seems like more of a kick in the teeth for agents who have supported their growth! I hope they are giving Gold/Silver members some sort of separate bulk deal cheaper for loyalty and not shafting them.

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21st May 2019 11:32

". . . but we hope you’d agree we’re delivering real value to UK businesses." Gary Turner

Don't you agree?

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to andy.partridge
21st May 2019 11:42

No.

That implies that they have something no other software house has.

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to andy.partridge
21st May 2019 11:47

To "some" businesses. Its not bad software but its hardly the only choice.

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By Mr_awol
to andy.partridge
21st May 2019 11:50

andy.partridge wrote:

". . . but we hope you’d agree we’re delivering real value to UK businesses." Gary Turner

Don't you agree?

I do and I don't.

It's good software. I would say it's better that FreeAgent or QBOL and as such it's no surprise that it costs more. Whether the difference represents value is another matter, and we would probably come to many different conclusions between us all.

They are priced just below the point at which you could call it a complete rip-off though, which from their perspective means they've probably got their pricing just about right.

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to Mr_awol
21st May 2019 11:55

Mr_awol wrote:
I would say it's better that FreeAgent or QBOL and as such it's no surprise that it costs more.

Well designed software isn't necessarily more expensive to produce.

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to lionofludesch
21st May 2019 11:57

You're a cost plus pricing man, are you?

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to andy.partridge
21st May 2019 12:13

andy.partridge wrote:

You're a cost plus pricing man, are you?

I work to make a living, not a killing.

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By Mr_awol
to lionofludesch
21st May 2019 12:03

lionofludesch wrote:

Mr_awol wrote: I would say it's better that FreeAgent or QBOL and as such it's no surprise that it costs more.

Well designed software isn't necessarily more expensive to produce.

No but it's worth more.

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to Mr_awol
21st May 2019 12:14

Mr_awol wrote:

lionofludesch wrote:

Mr_awol wrote: I would say it's better that FreeAgent or QBOL and as such it's no surprise that it costs more.

Well designed software isn't necessarily more expensive to produce.

No but it's worth more.

Up to a point. Deciding what that point is is a fine judgement. Companies can lose out by their own greed.

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to lionofludesch
21st May 2019 12:23

lionofludesch wrote:

Companies can lose out by their own greed.

Or not anticipating changes in the market eg. Jamie Oliver not seeing the milkshake phenomenon.

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to andy.partridge
21st May 2019 23:29

You’re thinking of Farages bodyguard surely?

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By Mr_awol
to lionofludesch
21st May 2019 12:23

lionofludesch wrote:

Up to a point. Deciding what that point is is a fine judgement. Companies can lose out by their own greed.

I agree completely - and for a few years now have anticipated Xero having to adjust their 'premium pricing' model. So far they seem to be holding fairly firm though.

I even see that QBOL don't charge for bank feeds, which means presumably (with open banking and whatnot) the software providers don't have to pay for bank feeds - which makes me question why Xero continue to charge (and indeed charge different amounts for different banks)

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to Mr_awol
21st May 2019 14:53

I believe its the banks that make the charge for the bank feed not Xero.

Santander have a free feed with Xero as do most banks now which is why I tend to recommend Santander.

I only get charged for 1 Barclays feed.

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By Mr_awol
to Glennzy
21st May 2019 23:55

Glennzy wrote:

I believe its the banks that make the charge for the bank feed not Xero.

Santander have a free feed with Xero as do most banks now which is why I tend to recommend Santander.

I only get charged for 1 Barclays feed.

That’s what I believed too.

But having check QuickBooks website earlier, I see that they offer free feeds - although I’m not sure all banks are covered, some which are covered are chargeable via Xero (HSBC, NatWest and RBS). That means that one of the following statements must be true:
1) QB lose money as they still pay the bank (no chance)
2) QB are much better negotiators than Xero and don’t pay but Xero do (unlikely, although QB can manage a Lloyd’s feed that Xero seem incapable of)
3) Xero still have to pay under historic agreements but QBs are free as they are more recently agreed under open banking, or with open banking on the horizon the banks went with it (this is, I think the most likely situation)
4) Xero no longer have to pay but keep on charging customers and pocket the extra (not that likely but I’m not discounting it entirely as an option)

I think all feeds will eventually be free for all providers - and am not entirely sure why they aren’t already. How quickly the software providers pass on the savings is another matter. Part of me wonders if the feeds will become ‘free’ at the same time as a price rise.....

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to Mr_awol
22nd May 2019 10:30

Interesting.

I have Natwest feeds with Xero which are not charged for.

Anyway that's why I guide most to Santander which works well with Xero, and is easy to set up and free.

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By johnt27
to Glennzy
22nd May 2019 15:18

It depends on the source of the feeds. If they come through Yodlee these are free but direct feeds (in the main) are paid for due to charges arising from the banks. These are legacy issues arising from Xero being the first to establish direct feeds in the UK.

Direct feeds are only a recent feature to QBO and these are built off the back of Open Banking APIs. Xero are currently switching to these and so feed charges are expected to stop in the not too distant future.

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By Mr_awol
to johnt27
29th May 2019 10:51

johnt27 wrote:

Direct feeds are only a recent feature to QBO and these are built off the back of Open Banking APIs. Xero are currently switching to these and so feed charges are expected to stop in the not too distant future.

That's what i'd assumed - except the bit about Xero stopping their charges in the 'not too distant future'. They don't understand the concept unfortunately, having been "just about to release a Lloyds feed" for around two years now, and only ridiculous excuses to show for their failure to get the deal done. In fact, one has to wonder if they had our soon-to-be-ex PM in charge of the agreement.

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By tobynew
to Mr_awol
04th Jun 2019 12:44

I thought it was a free service, Looking into this deeper it seems it is.
"Is there a charge to use Open Banking?-No – Open Banking is free. However, some regulated apps and websites may choose to charge you for their products and services." https://www.openbanking.org.uk/customers/faqs/

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21st May 2019 13:35

Price increases are never popular, but Xero has continually invested in making good software better - is it 10% better than last year? Probably yes.

However, in my opinion, it's hugely deceptive (verging on dishonest) for Xero not to have announced the price increase before Accountex. It's not a sudden decision.

So, I feel they have failed badly when it comes to trust. Especially as this takes effect so soon.

Being held 'over the barrel' with a subscription model is one of the big disadvantages of cloud software. Vendors need to take care not to abuse their position in this respect.

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to peter.wood100
21st May 2019 13:58

10% better. Not sure. Most of the improvements made are now added cost extras (payroll, expenses bar one and project handling). They still don't offer the major improvement we feedback on - better payments on account handling and supplier accounts.

But then Xero have not gained my clients needing this facility anyway, as I have advised a different product for them.

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By marks
21st May 2019 22:27

You have to remember that 5 - 10 years ago SAGE were charging £1200 - £1500 for SAGE Line 50 Professional with support each year.

Makes Xero at £300 ish per year seem very cheap.

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By RedFive
22nd May 2019 07:09

That’s not quite true in my experience from an Accountants perspective.

10 years ago I had an Accountants Club Sage 50 licence for 50 clients for about £800 and it included payroll.

I didn’t renew the support after 1 year and didn’t need to upgrade for about 4 or 5 years so that’s all I paid.

Went onto subscription with them after that at £100 per month but agin that covered 50 clients.

Of course the problem was they are Betamax in a Netflix world so started moving away about 2 years ago.

Now pay QBO just under £1k per month and my business would be nothing like it is now without them.

Still hurts when the ddr goes out though.

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to RedFive
22nd May 2019 09:50

RedFive wrote:

Of course the problem was they are Betamax in a Netflix world .

No, the problem is/was that they are VHS.

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By johnt27
to andy.partridge
22nd May 2019 15:27

They haven't even made it to DVD yet?!?

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By johnt27
22nd May 2019 15:35

Not entirely unsurprising (it is the SAAS model) and there have been murmurings about this for some months.

Key thing is does this affect your perceived value from the product? This is a competitive space but most people choose Xero or QBO for their integrations and the efficiency this brings. There are, after all, free products in this area - Coconut, Wave to name a couple.

It's relatively easy to switch to alternate products and if you're only using Xero as a direct replacement for desktop accounting software (without integration to other services) I'd suggest you've missed the point and aren't making the most of the product and ecosystem.

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