Online accounting giant Xero will not drop its subscription prices, or let businesses use the service for free, despite the Covid-19 pandemic and lockdown putting extreme financial strain on its customers.
The decision not to offer subscription relief has upset Xero business customers who are publicly asking for discounts as offered by other software-as-a-service companies like Adobe in the United States.
Xero chief executive Steve Vamos said on Thursday that his company needed revenue from subscriptions to continue to develop the service it provides.
"Something I really want to address is the question why isn't Xero offering subscription relief," Vamos said.
You know we've now grown to serve over two million customers around the world and we provide a critical service that they all depend on.
"And our growth has been fuelled by our commitment to reinvest the bulk of the revenue we generate back in our business to support the development of our service and also help us bring that benefit to more and more small business customers around the world," Vamos said.
Instead of offering relief, the Xero boss suggested that customers in difficulty either downgrade their plans to cheaper, limited ones or cancel or suspend their subscriptions.
A 30-day notice period for subscription changes or cancellations allows customers to complete tasks such as tax statements and applying for government grants, Vamos said.
While customers won't be able to access their data or update it after account suspensions or cancellations take effect, their data is retained by Xero.
"Then, when customers who suspend are ready to return, their data is available to them to pick up where they left off," Xero spokesperson Natalie Benning told the Herald.
To comply with IRD requirements, Xero retains New Zealand customers' data for seven years after they deactivate their accounts.
Vamos' suggestions that customers suspend or cancel the service did not go down well with business owners who say they need to continue to use Xero to manage their affairs in difficult times.
"The issue I have with your decision not to provide assistance is that you are the only global SAS provider that I deal with here in Australia and globally that has not helped," a Xero user across the Tasman wrote in response to Vamos.
Others either threatened to switch, or said they have moved to competing accounting software providers.
Benning said that users who wish to download their financial data can do so via the Export functionality.
Xero intended to increase the price of the Starter plan subscription by $2.50 to $30 a month, and the Standard and Premium plans by $2 to $62 and $77 a month plus GST respectively by March 18.
It has now delayed the price increases, which will come into effect on July 1 instead.
In response to the Covid-19 pandemic, Xero has set up a Business Continuity Hub web page with links to advice for small businesses.
A spokeswoman for the council told the Herald that Xero has not applied for wage subsidy schemes in Australia or New Zealand.