If you're using Xero, you may have heard about their recent plan changes and price increases. In Australia, these changes take effect from 1 July.

Xero has announced that the new plans are designed to better meet the needs of small businesses. It seems their aim is to simplify the selection process by reducing the number of plans and bundling key features into packages.

However, this simplification could result in significant price increases for many small businesses. Some are not particularly enthused by this change:

Screenshot of a post by a user on Xero's customer portal as of July 11, 2024

A Typical Example for a Small Business in Australia

Consider a small business owner in Australia, running a family business with 1 or 2 employees. You need to manage payroll and report Single Touch Payroll (STP) to the ATO.

Previously, you may have been using Xero’s Payroll-Only plan at $15 per month for up to 4 employees. From July 2024, the Payroll-Only plan will no longer be available.

To continue using Xero, users will need to switch to one of the new plans by next March at the latest. The most comparable plan, the Comprehensive Plan, costs $90 per month.

This means your monthly cost for payroll services will increase significantly from $15 to $90 – a sixfold increase.

Xero's new pricing plans as of July 11, 2024.

Alternatives to Xero Payroll

For those on Xero’s Payroll-Only plan, you may consider exploring alternatives as Xero will soon no longer offer this low-cost STP compliant payroll product. The ATO maintains a Software Product Register that provides a list of compliant products.

ClockOn is one of these options that offers and affordable payroll and STP solution.  

Xero Payroll Only vs ClockOn Pricing Comparison

To be fair, Xero's plans also offer accounting features. ClockOn offers a Xero integration asd

Consider ClockOn

ClockOn offers a starter package that’s free for up to 12 months (or 27 STP submissions, whichever comes first).

After reaching this limit, you can upgrade to the Standard Package from $135 per year. More details can be found here.

How to Change Payroll Software

1. Understand Your Current Provider’s Policies

Ensure you are aware of any deadlines, fees, and contractual obligations to avoid unexpected costs and data transfer issues when terminating your current payroll software contract.

2. Know What You’re Looking For in New Payroll Software

Identify the features and automation capabilities you need in a new payroll solution to ensure it meets your specific requirements and improves efficiency e.g STP, award interpretation, online timesheets, etc

3. Plan Your Transition in Advance

Carefully plan the switch to a new payroll system to minimize disruption to your business and employees, considering both busy and quiet periods. Most businesses give themselves 2+ weeks to ensure a smooth transition.

4. Make Yourself Familiar with Pricing Models

Understand the pricing tiers and potential additional fees of your chosen payroll provider to avoid unexpected costs and choose the plan that fits your needs.

5. Transfer Your Data and Perform Parallel Payroll Runs

Ensure accurate data transfer and conduct parallel payroll runs to verify the new system’s functionality before fully switching from your old payroll provider.

Note: ClockOn offers a setup service from (priced from $105) that follows this exact process to get you up and running sooner.