On Friday Intuit raised eyebrows at the Institute of Certified Bookkeepers’ Sydney conference by promoting its top-of-the-range online accounting program for just $5 per month.
QuickBooks Plus usually costs $35 per month which already undercuts its main rival Xero by at least $15. But the new marketing campaign signals a new stage of the online accounting war – Intuit is trying to hobble Xero before it can establish itself in Intuit’s home market, the US.
It’s important to note that there are qualifications with Intuit’s marketing campaign. The offer only lasts until the end of June (although businesses subscribing that date would enjoy the $5 per month price for the life of their subscription). The special price is available only to bookkeepers and accountants who signed up to Intuit’s ProAdvisor partner program, and they can add their own margin up to the retail price ($35 per month).
Although a licence for 10 staff was included in the promotion, the extra cost of payroll in QuickBooks Online Plus (supplied by third-party app KeyPay) will be paid for by Intuit only until 31 July 2015.
But despite these, the price drop will force accountants and bookkeepers to justify to themselves and their clients why QuickBooks Online would not be a better-value alternative. Particularly with the inclusion of inventory, quotes and unlimited users.
Industry observers have been unsure about some tactics employed by online accounting companies in hoovering up new customers. Offering commissions or discounts is standard practice to sweeten the deal for the recommending accountant or bookkeeper.
Intuit and Xero have offered free practice management software to accountants who sold their programs.
And then there are rumours of one accounting software company giving away licences to a large franchise to beat out rivals in a major deal. Or bulk pricing for big accounting firms moving clients en masse to one program. Growth is everything, more important than profit.
With customer acquisition or retention the primary goal of the largest players, it has become increasingly difficult to understand what is a fair price for online accounting software. Do innovations such as online invoices and online payments, automated bank feeds, employee portals and mobile interfaces justify a $50 per month pricetag?
Or should the core aspects of accounting cost $5 a month, as CCH’s Mike Chisholm has already claimed?
Intuit’s move was no doubt foreseen by its rivals as it is the only player who can drop its prices to unsustainable levels, at least in the Australian market.
Xero’s $180 million kitty is largely reserved to fund its assault on the US and it is already losing $13 million a quarter. MYOB must maintain revenue to meet debt covenants on a $540 million loan. Reckon still has plenty of software development to pay for before Reckon One reaches feature parity with other programs.
Thanks to US$4 billion in annual revenue, Intuit could maintain this price for a long time, long enough for Xero and others to be forced to respond if not match. There will be attempts to justify higher prices with greater innovation or supporting Australasian providers.
But the tech gap is narrowing and in the SMB market, price is often the first consideration.