Under Pressure

If only Freddie were still alive, he’d provide a shoulder to cry on for SaaS vendors. Yes, as the song says, it’s all about pressure;

News today that Xero (review here) has reduced it’s UK subscription from GBP29 per month to GBP19 per month. Putting a brave face on the announcement (spin perhaps) Xero said that it came from;

…a review of our pricing structure - in an effort to make Xero’s pricing more consistent across countries… As a result of this review, we are pleased to announce that the UK monthly subscription access fee has been reduced to £19 per month

The UK seems to have a real abundance of SME accounting providers – KashFlow, FreeAgent and Xero are all competing in a similar space. KashFlow and FreeAgent (CloudAve reviews here and here) are both below the new Xero monthly price (although the gap is more palatable than before Xero’s move).

The fact of the matter is that Xero (a publicly listed company with a fantastic and, admittedly expensive, bunch of people on board) is up against tiny companies that are bootstrapping their way to success. Bootstrapping will always be cheaper then building scale quickly – and reducing prices isn’t a major problem per se, it just means that Xero will need to find more customers in order to meet the revenue demands of their shareholders – they'll be hoping that the quality of their product, and the new sharper price point, will help in that quest.

Don't be a dick Ben. As we clearly stated we reviewed pricing for global and thought $US29 was the right point for us. That put the UK pricing out of line as a few people commented when we launched our global version. We would have changed it at the same time but got global out early. This is simply putting it right for our customers and being consistent. As Xero is very public about our numbers you can see that Xero is going very well and accelerating. 3000 and growing quickly. You're better that this type of silly comment. Rod

@Jack - it's OK, I just got off the phone to Rod. Living in the same (incredibly remote, incredibly small) country means that, from time to time, he can call me a dick in public without causing too much offence. I'll grant that there are more reasons for the pricing change than purely market pressure and that the Xero global pricing needed to be made consistent. All water under the bridge and suffice it to say that Rod will be buying me a beer next time I visit Xero HQ in Wellington ;-)

Jack, Great isn't it. CEO of a publicly listed company tells it straight. Read Rod's comments on UK pricing from last year - which Ben will be well aware of. Rob is right, Ben is (usually) better than this.

Ben has full authority to out me as a dick as soon as he can. I can't believe he hasn't already. Seriously though we pride ourselves on being very open and honest in our communications and disclosures as we must as a public company. As soon as global went live we had comments from UK customers and we wanted to be consistent and do the right. As a public company we are always under pressure to perform but to suggest that this was the primary reason for the price change was simply incorrect and appears unduly cynical. This is a very new industry, expect significant change as the market shakes out. We're all learning. Rod

my only comment here is that Ben (and other bloggers)have absolutely got the right to comment as they see fit. Good or bad, commentary has always been around and always will be. We're a SaaS vendor - www.proworkflow.com and like Xero, but are also fully aware that there will always be competition and people will always have an opinion. We all just toughen up and move on.

I think this has been all blown out of proportion. Only 2-3 of the SaaS offerings will be massive, Xero is fighting hard to be one of them. I see that this is a step in that direction, which can only be seen in a positive light...

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