Exclusive SaaS-y accounting outfit Xero has advised developers who integrate their products with its services that they’ll soon have to pay for the privilege in a new way.
Xero started its life in New Zealand and has since won over 4.6 million subscribers in 180-plus countries. In Australia, Xero displaced the dominant player MYOB. It’s a challenger brand chasing the likes of Sage and Intuit elsewhere.
Xero today emailed developers who create products that integrate with its services. The Register has seen that mail, which opens “We are deeply committed to investing in our ecosystem” and states that Xero wants to “ensure our platform supports your app development journey.”
Xero will do two things to meet those goals, the first of which is “introducing a tiered pricing model based on your API connections and usage.”
Developers who create products that work with Xero can bill their customers direct, or place their wares in the Xero App Store at the cost of 15 percent of average revenue per user.
The email seen by The Register links to this page, which says Xero will retire the 15 percent commission scheme and replace it with the following tiers and charges:
Xero's new Tier Fees, Connection Limits, and API Volume Usage - Click to enlarge
Xero says this scheme is “Designed to meet developers where they are in their app development journey” and will make it “clearer for you [developers] to forecast and control costs.”
The table is starkly clear to Alex Lacota, co-founder of a balance sheet reconciliation app for Xero called RecHound, because his access to APIs was previously free.
He therefore fears the change represents bait and switch tactics.
“As it stands, RecHound would be up for an annual bill of $17,340.00,” he wrote on LinkedIn. “As a bootstrapped startup – that would financially eclipse our 2nd highest annual expense by a country mile.”
Lacota warned his customers that he may need to pass on those costs.
“RecHound has not once increased it's fees over the last 3 years, and I've been steadfast on keeping them as is, even while we deliver new features,” he wrote. “Unfortunately this may need to change slightly due to this, because as it stands, an API fee this high would become a huge financial burden to us.”
Lacota says he understands Xero’s need to charge for its API, but feels Xero’s prices are too high for his business and for startups.
“A fee as high to access the journals of our users would be severely impactful for RecHound, and it would render smaller, less developed apps completely unfeasible,” he wrote. “To put it another way, RecHound would not have been viable in the slightest if this were in place 3 years ago when we had started.”
Xero’s rivals are keen to point out the change. Phil Johnson, general manager of payroll and HR software house Tanda, suggested a shift to his company will result in lower bills.
The Register has asked Xero to comment on its changes but had not received a response at the time of writing.
The second change mentioned in the email comes in the form of revisions to Xero’s legalese to prohibit using API data to train artificial intelligence and machine learning models. The company has also clarified its language to specify “apps must not use bots or browser extensions to undermine our security controls or simulate user actions.” ®
Source: The register