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Accounting made easy
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Wannabe Geek

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Xero

# 42158 29-Sep-2009 19:20
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Xero is the provider of  New Zealand's online accountancy Saas - software as a service -  platform for business accounting at Xero.com.  It was founded by Rod Drury and Hamish Edwards three years ago, launched to coincide with an IPO on the sharemarket and recently received a large keystone investment from MYOB founder Craig Winkler. The company is an exporter and provides services into the US, UK and Australia as well as here at home. 

This conversation with Xero has been prompted by changes to our pricing plan structures.  Details of the packages have been blogged by Rod Drury.

Basically, whereas in the past Xero has simply had a one size fits all pricing point of $49 per month. From October 11 the company will be offering Small ($29 per month), Medium ($49 per month) and Large ($64 per month) plans. Large is for businesses who need features such as multicurrency conversion. Small is for businesses such as freelancers and small property investors who have a small number of transactions per month. Medium is the same as what is offered at present.

This move just confirms something Rod hinted at some time ago here in the Geekzone forums – something many have requested over time.

We are particularly interested in picking up from the last discussion and talk to the Geekzone community  (which appears to include among it a fair number of contractors and freelancers)  about the Small plan. 

Are you presently using spreadsheets to do your accounts? Is this new pricing point attractive to you? What are your options today? 

In this conversation in Geekzone we will be joined by Andrew Butel (Xero Product Manager) and  Helen Matterson (Xero Communications Manager) and most likely Rod Drury (Xero CEO and fellow Geekzone member) himself. On Thursday the company will be releasing some new numbers to the sharemarket and the spokespeople will be able to talk about those also. 





Xero (The world's easiest accounting system) | Xero Blog | 2009 Success & Survival Guide



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282 posts

Ultimate Geek

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  # 259483 29-Sep-2009 20:05
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These are crazy.

Small is hopelessly tiny and should be an ongoing free trial (freemium). Why would I pay $1 per bank account line reconciled and another $1 per invoice?? I can only guess Small is there to make Medium appear better value.

What's Large about multi-currency? And where's the roadmap for "more sophisticated features we plan to release over time" - you could have charged extra for everyone one of these.

Make the small account free and charge $15/month extra for multi-currency. At least call the plans something more meaningful like Bronze/Silver/Gold or Limited/Unlimited/Unlimited Multi-Currency.


Why are NZ/UK quoted sales tax exclusive and AU quoted inclusive?





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  # 259494 29-Sep-2009 20:25
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I with agree Mike that the restrictions on Small are too tiny to be useful to almost anyone.

However I disagree with his comments about Large I think the value of that is fine, multi currency is difficult and complex and worth paying extra for if it's done well.

 
 
 
 


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  # 259497 29-Sep-2009 20:37
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Xero: $768/year +GST for multi currency, stop paying and stop accessing your data.
Quickbooks Pro: $628 including GST ( http://www.pricespy.co.nz/search.php?q=quickbooks+professional&all=1 ), once bought it's yours.

Horses for courses, and Xero does some nifty stuff it's true, but $768+GST a year, for as long as they want to continue to access their accounts with any sort of ease, is a lot of coin for a small business if they need multicurrency.

Bring out an offline or even just "archive" version of Xero and that would change the game noticably.








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  # 259507 29-Sep-2009 21:01
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James, I think you completely miss the point of having a "SaaS" (Software as a Service) application: you are not tied to the developer when it comes to updates.

Updates on Xero are transparent - you don't have to download and install anything. If you decide to fresh install your PC you don't need to reinstall. If you lose the original CD you don't have to pay for another copy.

Being web-based also means you can use from anywhere. It also means it will work on your Windows-based PC, or your Mac, or your Linux-based PC. It will work on a mobile device, from anywhere you are.

For example I used to use another Windows-based package. When I started using Windows Vista it wouldn't run on my PC. So my solution was to create a virtual machine running Winbdows XP just to run my accounting. How bad is this?

The approach between using a web-based solution and a PC-based solution so different, that this $140 different you point out may not be the deal breaker you want us to believe.





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Red Jungle
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  # 259512 29-Sep-2009 21:19
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Hi guys, love the product. And overall I'm happy with the pricing put forward - but as you've asked for feedback I'd have to agree that the limitations on the 'small' make it pretty unappealing to me (even though I probably fall within the target usage range).

Out of interest - can we have a little clarification of the limits of the 'small' plan?

If I was having a busy month and used up the 5 receivable invoices I'm allowed, what next? I can't invoice for another month? Or I'm expected to upgrade my plan to carry on (on the back of one busy month)?

And what happens when I have too many bank transactions in a month? presumably the additional transactions don't import and I have to then go back and import this manually?

Cheers




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Uber Geek


  # 259515 29-Sep-2009 21:29
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It's not a $140 price difference. That is true in the first year. But not in year 2, or 3, or 10. Accounting very seldom changes in such a manner which requires a software update for the majority of people.

Until recently, one organisation I work with was using accounting software nearly 10 years old (Quickbooks), with no problem, they had not upgraded because they didn't need to upgrade. So let's look at the costs in that - Xero $7680 + GST over 10 years versus other software around $1066 (initial purchase, 1 upgrade) + GST . Ok that's pushing the limits quite a bit, but I'm exaggerating to highlight my point.

I absolutely understand the SaaS model, it's just unfortunate that a big draw card for SaaS (for the providors) is the ability to wring out much much larger amounts of money from the customer over the long term, and having your data there, at the whim, of another company (see the Google vs. Bank case recently for why people should worry about this stuff).

I'm getting off topic now, this thread is about opinions regarding pricing for small business, and my opinion FWIW, is it's too expensive.




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  # 259529 29-Sep-2009 21:58
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Not wanting to be a troll but...

http://diversity.net.nz/saas-and-coffee-%E2%80%93-they%E2%80%99re-both-all-about-granularity/2009/09/29/

Happy to chat with people about this stuff - it's what I live and breathe...




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  # 259580 30-Sep-2009 02:02
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sleemanj: Xero: $768/year +GST for multi currency, stop paying and stop accessing your data.
Quickbooks Pro: $628 including GST ( http://www.pricespy.co.nz/search.php?q=quickbooks+professional&all=1 ), once bought it's yours.

Horses for courses, and Xero does some nifty stuff it's true, but $768+GST a year, for as long as they want to continue to access their accounts with any sort of ease, is a lot of coin for a small business if they need multicurrency.

Bring out an offline or even just "archive" version of Xero and that would change the game noticably.






Quickbooks and MYOB are not "once bought". You have to get upgrades to get new "features" (read: bug fixes) and any changes to the law. We had MYOB cashbook, and were paying $25/month just for to keep current, in addition to the initial cost of the software.

Didn't help that almost every month, either they screwed up, or the bank changed their import format _just_slightly_, meaning for the first week or so of most months, we couldn't import anything.

And I'd happily pay double that a month for Xero. MYOB was awful.




Nic Wise - Waiheke Island, New Zealand - www.fastchicken.co.nz


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  # 259581 30-Sep-2009 02:09
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And in an attempt to provide Xero with some feedback: I'd also like to know what happens if I go over the allotment. 20 txn's a months appears small, esp in NZ where most months bank fees, interest and tax on interest would take out 3 of those. Is it 20 (but stay under 30 and we dont charge you more) or 20 (and the 21st costs you $10) etc?

Also, I've not seen this (rather specialized) situation covered:

I contract in the UK. I'm definitely a "small" for that. We also have investment property in New Zealand (totally different company), so need a small or maybe medium for that. Is that catered for? Can it be billed separately?




Nic Wise - Waiheke Island, New Zealand - www.fastchicken.co.nz


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  # 259585 30-Sep-2009 03:50
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Quickbooks and MYOB are not "once bought". You have to get upgrades to get new "features" (read: bug fixes) and any changes to the law. We had MYOB cashbook, and were paying $25/month just for to keep current, in addition to the initial cost of the software.


Saying "oh you have to keep upgrading" simply is not true for the majority of SMALL businesses, in the majority of financial years when discussing a mature accounting product.  Sure, sometimes it becomes desirable or even necessary (major changes to law, small changes are just configuration your accountant can do - if you need help), but most of the time, no, it just keeps trucking along.

By way of example, I purchased my own business' last Quickbooks upgrade in 2005, it's still working just fine and has required no further outlay of cost, every year I take a look at the current release of Quickbooks and decide "is there anything there that I want or need" and decide based on that if I should pay for an upgrade or just keep what I have.

Trying to steer back to on topic.. remember, this thread is about SMALL businesses (and by Xero's definition that is VERY VERY SMALL businesses).  It could be argued that in fact the smaller the business, the LESS they should "upgrade", lest there is a constant learning curve of new features (and the inevitable occasional bugs) which small business operators simply don't want, better the devil you know.







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James Sleeman
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  # 259586 30-Sep-2009 04:49
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sleemanj: Saying "oh you have to keep upgrading" simply is not true for the majority of SMALL businesses, in the majority of financial years when discussing a mature accounting product.? Sure, sometimes it becomes desirable or even necessary (major changes to law, small changes are just configuration your accountant can do - if you need help), but most of the time, no, it just keeps trucking along.


Sorry, but that wasn't our experience. If we did that, we'd not have bank statement imports, which was rather key for us. BTW, we got (from memory) no new features from this - only bug fixes and a couple of changes of law change stuff.

To give you an idea, we are / were a small company (ie, US!) with 5 investment properties, and also IT consulting (seperate company) - again, just us. Xero standard edition is fine, but slightly overkill if I consider the small version - which would be fine 11 months out of 12..... just wondering what happens in the 12th month if I have 21 transactions or 6 AR's :)

But anyway - not really on-topic by either of us!




Nic Wise - Waiheke Island, New Zealand - www.fastchicken.co.nz


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  # 259590 30-Sep-2009 07:07
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RedJungle: Hi guys, love the product. And overall I'm happy with the pricing put forward - but as you've asked for feedback I'd have to agree that the limitations on the 'small' make it pretty unappealing to me (even though I probably fall within the target usage range).

Out of interest - can we have a little clarification of the limits of the 'small' plan?

If I was having a busy month and used up the 5 receivable invoices I'm allowed, what next? I can't invoice for another month? Or I'm expected to upgrade my plan to carry on (on the back of one busy month)?

And what happens when I have too many bank transactions in a month? presumably the additional transactions don't import and I have to then go back and import this manually?

Cheers

I read somewhere that the limits will be soft (whatever that means). My business has used Xero for over two years now and all that have used it and loved it. But the limits on small, really are too small.

It seems that the small plan has been introduced to encourage to get low volume users to use Xero as well to set limits that would make it impractical for current medium users to consider downgrading. I wonder if the $29 price point is really low enough to attract such users.

Also I find the transaction limitations convoluted. A potential small user now needs to review their transaction history to see if small would be suitable - too much thinking for most people.




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  # 259595 30-Sep-2009 07:42
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I actually think I should be on "Small" but I have more banking transactions per month than their soft limits, and issue about twenty invoices a month. I would increase the Small and Medium limits a bit...




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Wannabe Geek

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  # 259608 30-Sep-2009 08:37
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Don't trip up over the names here - small isn't for "small" business - its for the micro businesses such as property investors and freelancers. Xero is designed for small businesses - so the medium and large plans are going to be the best fit for most.

Comparing Xero with desktop software is also not a great comparison - for all the SaaS vs desktop reasons, but people using Xero are pretty clear that it saves hours per month (and more hours per GST return) and gives much better visibility on your business. How do you value that? Maybe if you're only worth min-wage then $49 per month is expensive.

RedJungle asked for some clarification on the limits.

You get 5 AR and 5 AP invoices per month - based on the date of the invoice, not the date raised. These limits don't apply to drafts or deleted invoices.

For bank accounts, you can import your bank statement, but the bank rec will only let you process 20 per month (again - based on date of transaction, not date you're doing the bank rec). You can still enter bank transactions manually into Xero - so this is really just limiting the bank rec.

As we've said - these limits are soft. It would suck if you had 6 invoices once month and had to upgrade to medium for a month, then downgrade again, so when you hit the limits you'll get a few warnings before Xero stops you. These extensions allow you to raise another 5 invoices or 10 bank transactions. Not per month though - so if you're exceeding the limits every month, then small isn't the right plan for you.

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  # 259613 30-Sep-2009 08:54
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Also I find the transaction limitations convoluted. A potential small user now needs to review their transaction history to see if small would be suitable - too much thinking for most people.



You could be right, but everyone will start on a free trial which now lasts 6 months and lets you get started by raising your first 5 invoices and processing your first 50 bank transactions.  After you hit those limits, you can start paying for small and keep going until you hit those limits (unless its obvious to you that you'll exceed them).  Once you hit those limits, changing to medium or large is just a few clicks because obviously every time you get warned about the limits, there will also be a convenient link to change to medium or large.  

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