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Coconut’s simple bookkeeping and tax app is specifically designed for sole traders, helping them...
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As software prices go up, viable options for sole traders go down

24th Jun 2022
Brought to you by
Coconut
Coconut’s simple bookkeeping and tax app is specifically designed for sole traders, helping them...
Share this content

Amid an economic downturn and spiralling cost of living crisis, businesses of all sizes are feeling the effects. Now more than ever, raising software prices for small businesses who may already be struggling puts accountants and bookkeepers in a tricky position.

Stressed black male entrepreneur working on laptop in park
Pexels - Ketut Subiyanto

The cloud accounting software market has stabilised in recent years, with more practices nailing their colours to a particular package and sticking with it. And with reduced risk and product-switching comes an increased focus on profitability for the incumbents.

Accordingly, both Xero and Quickbooks Online have recently raised their prices, the former for the second time in 12 months. The reaction from accountants has been varied, especially when it comes to the smaller end of their client-list. ‘Our smaller clients can't sustain this fee increase,’ reads one concerned LinkedIn post. These accountants have a point – we’ve covered before how cloud accounting isn’t set up to solve the needs of sole traders and those with simpler accounting affairs. Price increases make an existing issue worse, so what can accountants do?

The sole trader price conundrum

With rising inflation, raw material and labour costs and market volatility, businesses big and small are feeling the pinch. However, raising software prices for small businesses who may already be struggling puts accountants and bookkeepers in a tricky position.

Sole traders are already particularly cost-sensitive when it comes to accounting services. Many have very simple tax affairs, average to lower-than average incomes and potentially variable revenues that leave them highly sceptical of regular software payments.

This is exacerbated by the fact that most accounting packages just aren’t designed for sole trader needs. Cloud accounting tools were designed with small to medium businesses in mind, meaning that for the majority of sole traders, they’re too complex to use, weighed down with features that don’t add any measurable value for them.

Meanwhile, they can also lack features that sole traders actually need, such as the ability to separate personal and business transactions within the same bank account. They often also require multiple licences for multiple income streams.

For accountants looking to transition their sole trader client base onto cloud software in advance of MTD ITSA, price increases limit the available choice of tools even further, especially when it comes to planning service models that can still deliver an appropriate margin. 

Finding the right tools

One of the most common complaints when software platforms raise their prices for accountants – as seen in recent online commentary – is the awkwardness of passing on the changes to clients. 

Every time accounting software prices go up, accountants either have to absorb the increase, lowering their margins and/or forcing them to find new efficiencies, or ask clients to pay more for the same tools they were already using. In the words of one LinkedIn commenter. ‘[This] makes their practice adoptees look unprofessional to their clients.’

For sole traders, this is an even bigger challenge due to the existing price sensitivity along with an attendant suspicion of price increases. 

The challenge for accountants is how to help move clients to an appropriate solution without losing customers and maintaining revenues, alongside the need to onboard clients onto new processes. 

Overcoming the software gap

To solve this issue, accountants need to offer solutions that are not only priced with sole traders and smaller clients in mind, but that actually work with the needs of these businesses and provide tangible value to smooth the changeover in processes and, potentially, pricing. Increasing prices is problematic enough – but increasing prices for a product that wasn't specialised to those clients in the first place also risks increasing the price-value gap in their eyes. 

Recent price increases put some of the most popular cloud solutions out of the realistic price range that sole traders are willing to pay. For accountants with exclusive or heavily-weighted sole trader client bases, now is the time to consider a purpose-built solution that can maximise your chances of keeping your clients compliant and profitable.

Coconut is accounting and tax software created with sole traders and their accountants in mind, tailored to their unique needs and ways of working.  

For a start, there are no complex features, no surprise costs and no confusing interfaces. Clients just use a simple, intuitive mobile app which feeds into a straightforward web portal for accountants and bookkeepers. You get real-time access to your clients’ accounting information, and your sole traders get a simplified accounting experience.

As an accountant, you can sign up for a Coconut Partner Account for free, explore the Coconut Portal and find out for yourself just how easy Coconut will make working with your sole trader clients

Create a Partner Account - It's Free!