On 12 September 2024, Xero began a process on reforming their current subscription format to offer an affordable and competitive service, and to supply their users with the tools to suit them. One of the most important aspects to note is that this affects existing and non-existing customers differently.
What changes have Xero made?
Firstly, we should note what changes have taken place.
The names of the plans have changed, so Xero is saying goodbye to “Starter”, “Standard” and “Premium” and replacing them with “Ignite”, “Grow” and “Comprehensive”. These new plans still roughly take the same shape as their predecessors, whilst there is also a routine price update.
The new prices are:
- Ignite - £16
- Grow - £33
- Comprehensive - £47
- Ultimate - £59.
Changes to add-ons
The main part of the price update concerns Xero’s add-ons.
Previously, users had the ability to pick and choose what add-ons they would like at their own discretion, however Xero users now have to change their subscription plan as a whole to decide which add-ons suit them. Apart from CIS which is optional at all price points, add-ons are now directly linked to different subscription levels, and if users want a specific add-on, they must select a plan which includes it. As a result of that, there is no longer a cost for using each of the specific add-ons and they are included within the subscription price.
This is a lot simpler for new customers, who are effectively given a menu of the new price plans, and they can pick the option that best suits them and their business. Though, it could mean that a company might be forced onto a higher subscription price if, for example, they would like to use Xero payroll – which is only available on more premium pricing plans. However, and more ideally, it could mean that you are getting services and add-ons included in your plan that you didn’t have access to previously, that could help you with day-to-day running of your business.
Existing customers will be slowly migrated onto these new price plans starting from February 2025.
Your Xero subscription could be moved if you are an existing customer
The most important part to note for existing customers is that your subscription could be moved.
For example, if you are currently on a “Standard” plan, with payroll access for 3 users, you will be automatically moved to the “Comprehensive” plan, because this is the lowest price point that includes your current add-ons. In that situation you would experience a price increase, and as you could imagine there are some situations where customers could expect some hefty price rises.
Xero are aware of this and so are offering discounted prices to effected customers. If you are the subscriber, and think this may affect you, then you will be emailed by Xero in late September 2024 to notify you of what changes will occur.
At this point, you will be given the option to remove any of your existing add-ons to try and decrease your monthly subscription cost, however in doing so likely causing inconvenience for your business. For some customers this could be a good opportunity to explore the wide range of cloud accounting software options that are available to business owners.
If you are not experiencing a price increase then you will be moved in February 2025, with other users being moved in September 2025. Though it should be noted that Xero have already pushed this date back once, so any further changes this system could result in more delays.
The next step
If you would like to talk more in depth about specific aspects of this price update, and what it could mean for you, please get in touch with Jack Northover on j.northover@uhy-uk.com or your usual UHY cloud accounting expert.
