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;
…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.