Tearing Down Xero and QuickBooks Online's Pricing (Case Study - 16k Data Points)
Online accounting is a growing market, with multiple players battling for their cut. This week’s Pricing Page Teardown features a head-to-head between an incumbent, Intuit’s QuickBooks Online, and an upstart, New Zealand-based Xero. ProfitWell’s Patrick Campbell and Peter Zotto look at data collected from 16,434 QBO and Xero customers and reveal that both companies may be overstepping the boundaries of willingness to pay in some areas, while leaving money on the table in others. And, design matters more than you may think.
https://www.priceintelligently.com/blog/pricing-page-teardown-xero-quickbooks-online
Hey Patrick, the team and I at Paycove love using ProfitWell. You guys deliver a ton of value with the free product.
We're a quoting and invoicing software so a lot of the industry/user metrics in this teardown were super insightful. Thanks for putting these together, keep up the good work!
I love your teardowns. Thanks for continuing to provide this awesome educational content. I find little nuggets in each episode.
Only wish your had services at PriceIntelligently that made sense for IndieHackers. Seeing how to survey and interpret the data shows real understanding for this sort of thing, but at $45K, I don’t know many IH that would engage in that.
Thanks for watching! We do offer ProfitWell, our subscription revenue metrics platform, for free and are also happy to connect and offer some free advice as a part of using the service. We also offer a free pricing audit through the Price Intelligently team and I'd be happy to help get anyone here on IH set up with one.
Hmmmm... when I was investigating your service after stumbling across the Pricing Teardown site I was under the impression it was a commitment of $15K/month for 2 to 3 data reviews a quarter, or $45K for a single review. Don't believe I ever came across something that was more tailored to IH.
In any case, it's great news to hear you are supporting IH. Thank you very much.
Helps if I give you the link, doesn't it? :) https://www.profitwell.com/
It's a separate product from Price Intelligently, so it has its own domain. Have a look, and reach out if you have any questions.
Very helpful. Thanks for sharing. It looks like ProfitWell will be useful as we have more data spitting out of Stripe. I'm not sure how that compares to BareMetrics or ChartMogul, I'll have to look a bit deeper as we are ready for that.
When you are preparing to take a product to market though that hasn't yet been offered, how does one determine the RIGHT pricing? That's where I know I've been struggling. Very few IH have a tiering subscription business pointing to B2B that is averaging an ARPA/ARPU of $500/month. When building our financial model and forecasting the cash flow trough we don't have the right data to accurately set this. While we have been doing some prospect interviews and comparing and contrasting to our competitors... it's a struggle to get it right... and a reason why I started looking into your services.
Appreciate the deeper look, and let me know if I can help in any way. We're definitely in the same space as BareMetrics and ChartMogul. Our competitive advantage sits mostly in our accuracy (we use a different data model to get to our metrics, which allows us to get to 100%). We're also free - monetize through paid add-ons, because our philosophy is showing insight and opportunities should be free. When we help you make money, then we charge you. :)
In terms of the right pricing, the first thing to get in your thought process is that there isn't a right pricing strategy. You're in the game of cloning your customers, and because of that there are always going to be margins where you'll lose out on similar customers or folks who just aren't a good fit.
From there, you have to go to your customers and talk to them about pricing. There are some clear methodologies you can use to do this and it needn't be extremely complicated, but they're the only folks who are going to be able to get you the answers you need. Read through our ebook here, because it covers most of this in detail (you don't need to buy anything or do a ton of work to get on the right track). https://www.priceintelligently.com/developing-your-saas-pricing-strategy
The #1 thing you should concern yourself with though is your value metric (how you charge - per user, per 1000 visits, etc.). The reason you need to use one of these is it bakes expansion revenue and lower churn directly into your pricing model. If you hit the right value metric and get mostly everything else wrong, you'll still be a-ok, because you'll ensure you're not charging small folks the same as large.
Hope that helps. More than happy to dig deeper here, of course. :)
Great insights and information here Patrick. I’m very grateful for the time you have spent thinking about this and appreciate what you do for the community.
Let me take this offline with you. I’d love to go deeper and have a discussion. Perhaps we could find a way to engage; I’d like nothing more than to get this right and build my company to need all your services 😀