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Excessive price rises among some larger accounting software providers will see accountants and SMEs vote with their feet, according to the software firm.
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Xero price hikes could trigger shift to other platforms, says Reckon CEO
06 May 2024
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Some of the larger accounting software firms are imposing significant price increases on their users at a time when many businesses can least afford it, says Reckon chief Sam Allert.
Xero announced price increases across a range of its software services last week, with its 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. All price increases will start from 1 July.
Allert said Xero has enjoyed great success in New Zealand and Australia but their international expansion has meant a more intense focus on profitability and boosting margins more recently.
“One of the easiest ways to [increase margins] is through price increases and we’ve now seen the second price increase in less than 12 months,” said Allert.
These increases are also occurring at a time when the cost of living is worsening and businesses are facing a tougher economic environment, he said.
While all software providers including Reckon are increasing their prices, Allert said increasing pricing steadily, roughly in line with CPI, is a more appropriate pricing strategy.
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The software firm said it was clear that many Xero users were “disgruntled” over the recent price hike, with Reckon inundated with calls since the announcement from accountants and business owners looking for a more affordable option.
“I think it’s a big issue and disappointing for SMEs in Australia. Users are unhappy with these increases,” he said.
According to Allert, cost has become an increasingly important factor in deciding between software providers with costs already rising across a wide range of areas for businesses.
“The [accountants and SMEs] that we’re speaking to are looking for an affordable, easy-to-use software that is sustainable to their business,” he said.
Users are also looking for value for money through investment in development and support services as well, he added.
Following the price announcement last week, Xero software users said a lack of new features and enhancements on its platform meant the price increases were unjustified.
“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.
“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 rationalise another increase in price?” another user said.
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