Xero flexibility means pay more!

I’m a very happy user of , but not yet using their payroll as it has been too expensive for me. My business has a high number of staff who work few hours, so payrolls which charge per staff member are very costly as a percentage of wages for me. Hence I remain on MYOB for payroll.

Anyway I got excited to get an e-mail from Xero that said:

More flexible plans
From 19 October Xero plans will be more flexible – giving you more choice than ever. Now you can choose whether you want payroll in your plan and you’ll only be charged for the number of unique employees you post each monthly billing cycle.

More flexible – that should be good news – right?

What are the key changes

  • Payroll is being unbundled from our Standard and Premium plans
  • Customers on our Starter plan can now add payroll
  • Adding payroll will cost +$10 which includes one employee
  • Additional employees will cost +$1 per unique employee per billing cycle

The Premium base plan will be reduced from $75 to $70 per month

So what does this actually mean. Well let’s look at current prices here.

  • Premium 10 $75
  • Premium 20 $85
  • Premium 50 $100
  • Premium 100 $140

So what will these cost under the new flexible plans:

  • Premium with 10 employees $89 (19% more)
  • Premium with 20 employees $99 (16% more)
  • Premium with 50 employees $129 (29% more)
  • Premium with 100 employees $179 (28% more)

Yes the new prices are more flexible and it is useful you can now have payroll for multiple staff with the non premium plans. But if you’re a premium customer, that’s a pretty big increase – disguised as flexibility.  They have grandfathered premium prices until March in recognition as that.

I like Xero as it is normally straight talking. I’m not sure a price increase hidden by flexibility is good for the reputation.

Even with me as a standard user, I’d be paying $14 more a month with this flexibility, as we normally have around 100 employees.

Also it would be nice if Xero broke away from the traditional payroll pricing of charging you per employee, instead of for the service. You don’t pay per general ledger transaction or per invoice for other accounting functions, so why charge per employee?

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