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Accounting software giant draws storm of criticism after jacking up plan fees for the second time in a year.
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‘The final straw’: Xero users baulk at another price hike
03 May 2024
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Accountants and business owners have blasted Xero’s pricing and services after the software giant announced it would be raising fees for the second time in a year.
Price changes would start from 1 July and included the payroll-only plan increasing from $15 to $20 a month (a 33 per cent increase), the standard plan increasing from $65 to $70 a month and “Ultimate 100” at the top end increasing from $215 to $245.
Premium plans would also be converted and follow equivalent “Ultimate” tier pricing structures, Xero said this week.
The news of another price lifted shares, up 3.89 per cent in the past five days to $123.63, but has drawn a storm of criticism from users.
Some accused the company of “punishing its customers” and others agreed the move was the “final straw”, planning to switch to competitors.
“This is ridiculous, another price rise, not even twelve months in from the last one … you've added no features, no value and nothing in the last two years that makes doing business easier, other than the STP which by all means was something the ATO required,” one user wrote on the forum Xero Central, adding that their accountant was “sick” of constantly amending contracts for disappointed clients.
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One commenter said they had used the software for a decade but they would now be “actively exploring alternatives”.
“I'm completely appalled by this latest price hike; it’s completely outrageous and profoundly disappointing. I've been a loyal user of Xero since 2014, but I've seen minimal, if any, enhancements to the platform. How on earth can you rationalize another increase in price?” they asked.
“This latest price increase is the final straw and such an insult to your customers,” another said.
Excluding the 33 per cent rise to payroll-only plan, most of the changes involve price increases between 5 and 13 per cent. However, when other recent rises are factored in, some plans have almost increased by half in the space of a few years.
For example, in the past three years, monthly fees for Xero’s most popular standard plan have gone from $50 to $70 (a 40 per cent increase). Its “Premium 5” plan has moved from $65 to $90 (a 38 per cent increase).
The decision comes after the New Zealand-based company recorded almost NZ$800 million in revenue growth, a 21 per cent year-on-year increase, and over $54 million in profit, according to H1 FY24 financial results.
Chief executive Sukhinder Singh Cassidy attributed the performance to Xero’s "ongoing focus on balancing growth and profitability”.
To this end, Xero has also culled some 800 jobs and retired assets, such as lending platform Waddle and HR app Planday in Australia, since Singh Cassidy’s appointment in February 2023.
It incurred a write down of around NZ$40 million in FY23 for Waddle and expected to incur an “immaterial” writedown associated with Australian product development for Planday.
Xero was contacted for comment.
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