Multi-level application from Xero

Xero have announced that they're migrating from a "one-size-fits-all" software application to a multi-level application.

Put simply, smaller businesses can now pay a reduced fee (here in the UK that would be £12 per month instead of £19 per month), but any customers paying that reduced fee can only enter 5 sales invoices per month, 5 purchase invoices per month, and 20 bank transactions per month.

And businesses that need multi-currency would pay £24 a month.

Reading the comments, I think these prices apply to new users signing up after 11th October 2009. Existing users would continue to get multi-currency as part of their package.

I'm not sure what I think about that.

In principle I'm all for paying for only what you need. It wouldn't make sense to pay for stock control if you're running a service-based business, for example. But I'm not sure I like how Xero have chosen to draw the boundaries.

Certainly I'm not sure that capping the number of transactions for micro businesses is a very good idea. Some small businesses would fit comfortably, for example a small IT contractor who has only 1 or 2 customers and sells his/her own services so has very few purchase invoices. But others would not. My own company quite often has more than 5 sales invoices to issue a month. I'd be snookered for the smallest plan if I were on Xero.

And I'm also not convinced that multi-currency is such an optional extra any more. Ask me a few years ago and I'd have said yes. But plenty more businesses now have customers abroad who have to be invoiced in their own currency. Not all overseas businesses are happy to be invoiced in £ sterling. I've had to issue 2 invoices in US dollars before now. That means I'd also be snookered for the medium plan on Xero. I'd have to pay £24 a month instead of £12. That's an extra £144 a year. Which, for a small business, is not to be (atishoo)* sneezed at.

Personally, I prefer FreeAgent's pricing structure, whereby the monthly amount paid is determined by whether your business is a sole trader, partnership/LLP, or limited company. It's 99.9% certain that a limited company will need to be able to produce dividend vouchers, and a sole trader won't - so they're in for a company and out for a sole trader.

Disclosure: FreeAgent is a customer of mine.

* Yes, I really do say "atishoo" when I sneeze. Honest.