August 06, 2024
Article
Annual subscription price increases are nothing new; the most obvious being your mobile phone contract. Xero have also been doing this for a long while now. Each September the price you pay for your accounting software usually increases by £2 - £4 each month, about the price of a coffee.
From 12 September 2024, Xero is launching three new streamlined business plans (Xero Ignite, Xero Grow and Xero Comprehensive) and enhancing the Ultimate plan. The three new plans will replace the Starter, Standard and Premium plans which will no longer be sold from 12 September 2024.
For the users of core Xero, i.e., bookkeeping and VAT, very little changes: the revised lowest tier, Ignite plan, increases by £1 to £16/mo and the highest tier, Ultimate plan, increases by £4 to £59/mo.
Details of the new plans can be found here: New plans overview | Xero UK
Xero’s message is that the new simplified plans are designed to provide you with easier access to the tools to help run your business efficiently. That means fewer add-ons, as more key features are included in plans.
Whilst this is true, not being able to select the add-on you need to the plan that best fits the core business needs, but having to select the plan that contains the add-on(s) you need and more that you don’t, you could end up paying disproportionately more on the new structure than the old structure.
The worst example:
You are a two-director business with less than 20 sales invoices a month, and you reconcile expenditure from the bank account rather than utilising the Bills to Pay features. Currently this costs you £15/mo for the Starter plan and £5/mo for Payroll. From 12 September 2024, you will need the Comprehensive plan at £47/mo to operate payroll for up to 5 people. This is a £27/mo or a 135% price increase.
Another common example:
You trade solely in the UK, thus have no multi-currency requirements, and employee 10 staff. Currently this costs you £30/mo for the Standard plan and £10/mo for Payroll. From 12 September 2024, you can only run payroll for 10 or more people in the Ultimate plan at £59/mo. This is a £19/mo or a 47.5% price increase.
The examples show the main businesses impacted are those using Xero Payroll. Xero Projects also moves from being a £5/mo per active user add-on, to only being available in the £59/m Ultimate plan. Albeit, this is for 10 users, which would cost £50/mo on the current billing.
This highlights how there will be winners and losers from the streamlining of plans.
Importantly, we are not recommending businesses move from Xero off the back of the pricing changes. For appropriate businesses, Xero is still our preferred accounting platform. We are also likely to see comparable price rises from QuickBooks and Sage.
With such a significant number of clients using Xero, and with multiple add-ons available, some of which are billed on active monthly users, we cannot give you your individually tailored price rise.
A full comparison with existing plans and add-ons can be found here: New_business_pricing_plans_comparison_UK.pdf (xero.com)
If we hold the Xero subscription and disburse to you, a discount is applied to certain parts of your bill and will reduce the prices quoted above. If you are not already signed up to pay our invoices via GoCardless, for automated collection of these bills, please see your latest bill for details.