Xero Payroll only: Price changes, payroll-only plan phase-out & impact on small businesses

Significant changes are underway for Xero users in Australia.

Starting 1 July 2024, business owners and employers relying on the accounting software provider saw a price increase for Xero’s Payroll Only plan, as well as the Starter, Standard, Premium 5, Ultimate 20, Ultimate 50, and Ultimate 100 subscriptions. Active Xero Payroll Only users are now paying 33% more than the original plan price, from $15/mo to $20/mo.

On March 2025, Xero plans to completely discontinue the Payroll Only plan and move all subscribers to a new set of plans.

This pricing update follows a prior price increase last 13 September 2023, resulting in plans becoming 5-38% more expensive for subscribed users.

Xero monthly subscription cost and plan changes

In May 2024, Xero announced the following changes to their subscription costs:

Cost changes in Xero monthly plans after 1 July 2024

Xero planOriginal monthly costMonthly cost after 1 July 2024
Payroll only$15/mo$20/mo
Premium 5$85/mo$90/mo
Ultimate 20$135/mo$145/mo
Ultimate 50$180/mo$200/mo
Ultimate 100$215/mo$245/mo

While other Premium plans did not see a price increase, subscribed users were forced to convert to a different tier as their original plans were phased out:

Xero plans converted after 1 July 2024

Original plan and monthly costConverted plan and monthly cost
Premium 10 at $99/moUltimate 10 at $115/mo
Premium 20 at $125/mo Ultimate 20 at $145/mo
Premium 50 at $170/mo Ultimate 50 at $200/mo
Premium 100 at $205/mo Ultimate 100 at $245/mo
This pricing update welcomed a new lineup of subscription plans that you can now see on their website.

ATO + Fair Work

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Xero Payroll Only plan pricing updates and phase-out

On top of the recent price increase, Xero also plans to phase out the Payroll Only plan by March 2025 completely. This means subscribed users will need to transition to a different Xero plan or find an alternative payroll solution altogether to continue using the service.

Initially, Xero’s Payroll Only plan was favourable for many small businesses in Australia. It allowed businesses with 1-4 employees to run payroll and report Single Touch Payroll (STP) to the Australian Taxation office.

However, the recent changes now only accommodate payroll for 1 employee while increasing the price for interested subscribers through the new Grow plan to $70/mo. If a business has more than 1 employee, it would need to pay even more, at $90/mo, through the new Comprehensive plan.

The outcry from Australian small business owners over the pricing changes has been clear on the forum Xero Central. One user writes, “This change doesn’t align with my business requirements and makes it worse. It raises the question: How does this alteration truly ‘better meet the needs’ of customers? Is Xero subtly nudging us toward higher-paying subscriptions?”

Discontinuing Xero Payroll Only plan & how it affects businesses

For small businesses struggling to maximise profits, discontinuing Xero’s Payroll Only product can pose a significant burden. Even a seemingly small price increase like this can eat into their bottom line. Being forced into a more expensive plan disrupts budgets and reduces the amount of money available for core business operations.

Using an STP payroll software is a government-mandated requirement for all businesses paying salaries and wages. This means that those with access to Xero Payroll Only will have to consider one of two options:

  • Subscribe to a more expensive Xero plan with features they potentially may not need
  • Switch STP payroll-only providers with a more affordable price

While switching software providers can be disruptive, calculate the long-term savings a new provider might offer. By being proactive, small businesses can navigate these changes and find a cost-effective solution for their payroll needs.

Considering payroll-only software alternatives

If you are one of the businesses that have been impacted by the pricing changes of the Xero Payroll Only plan, consider exploring other payroll solutions that are STP-compliant and budget-friendly.

Here’s where Payroller steps in as a strong contender.

Payroller is a user-friendly payroll software designed specifically for the needs of small businesses. It offers a compelling package with features like:

  • Free payroll & STP reporting for 1 employee
  • Affordable paid plans
  • Web and mobile accessibility
  • Free accountant access with Payroller Pro
  • Dedicated employee app with Payroller Employee
  • Super guarantee payments via Beam
  • Employee timesheets and time tracking
  • Staff rosters
  • Attendance and leave management

For a limited time, Payroller is offering a bonus of 99 cents per user for the first 3 months. Along with this offer, Patroller provides a 7-day free trial to let you explore the platform and its features before committing. Additionally, a 30-day money-back guarantee provides peace of mind.

Critical takeaways

Xero’s decision to hike prices and future phase out the Payroll Only product presents a significant challenge for Australian small businesses. Here’s a quick recap:

  • All Xero plans are seeing price hikes, ranging from 10% to 33% for the Payroll Only plan. This can strain small businesses’ already tight budgets.
  • The discontinuation of the Payroll Only plan in March 2025 leaves businesses with fewer affordable options for STP compliance payroll processing.
  • Increased costs and the potential need to upgrade plans can reduce cash flow and limit investment in other crucial areas.

Explore alternative payroll providers like Payroller, which offers STP compliance, budget-friendly pricing, and a seamless pay run workflow. By taking control, small businesses can navigate these changes and find a payroll-only solution that fits the budget.

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