From XU Magazine, 
Issue 36

Your guide to updating vendor software prices with Ignition

Changes to cloud subscriptions can mean extra admin to update your pricing, Ignition can help.
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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As an accountant, you manage a lot of apps on behalf of your clients. Changes to cloud accounting subscriptions can mean you need an easy way to update your service prices across your client base.  

But before you do so, you’ll need an effective plan to manage this change and consider what and how you’ll communicate to ensure that your messaging holds integrity.

Let’s dive into a few different aspects of the plan below.

A framework for approaching pricing changes

Consider who and what is affected:

  • Which clients are affected?
  • Does this impact your costs, or just your clients?
  • How are these costs currently being paid?

Consider your options and steps to take:

  • Absorb the difference.
  • Price in charges (packages).
  • Pass on the cost.

Consider how the new fees will be presented:

  • Included in the package.
  • Priced separately.
  • Separate engagements.

Planning for price changes

1. Who or what is affected?

We’ll need to first define who or what is affected. Is it a group of clients? Is it a particular service you provide?

If you have all of your clients on a formal engagement detailing their specific package and scope of deliverables, you can easily identify who or what will be impacted.

If you’re using Ignition, which empowers businesses to get paid faster and run smarter, you can use the service revenue export to identify clients receiving a particular service that requires a price change.

2. What are my options?

When a vendor increases their prices, there are a few paths that you can take:

1. Absorb the difference - If it’s a small or one-off increase, you can either absorb the difference or spread it across multiple clients. Then, increase profitability elsewhere in your business to accommodate.

A. Change is small or spread over multiple clients

B. Profitality increases elsewhere to accommodate

C. ACTION: Review on next pricing review

2. Prices in charges - Alternatively, you can build the increased cost into your service prices. You can include the vendors’ prices in your package and add a larger profit margin to give you a cushion in case a vendor increase happens again in the future.

A. You have added a margin on vendor cost (e.g. don’t pass on full volume-based discount to clients)

B. You have packaged services with a margin

C. ACTION: Review on next pricing review

3. Pass on the difference - Lastly, if the change is too large in terms of price or it forces you to change your terms and legalities, you might have to pass on the difference to your clients with a new shift in scope to their contract.

A. Change is too large or based on client number

B. Opportunity to change your terms too

C. ACTION: Issue a scope change to client

This might sound a little daunting, but if your contracts and engagements are all digital (as they are in Ignition), it’s easy to make these price changes to your engagements!

How do I change my prices in Ignition?

Step 1: Let your clients know first

Here’s a quick email template above to help form the basis.

Communicating the changes to your client is key.

Some good things to note are:

  • The nature of the change and sources of information (link to press releases or related blog articles from the company).
  • What specific actions (if any) do you need them to take (for example, sign-off, a reply or simply no action)?
  • When will this happen (specify a specific date when this new change will take place, or when the new pricing will take effect)?

Step 2: Decide how you will proceed with updating your prices in Ignition

We’ve listed a few methods below:

A. Get a list of active services and update the prices individually

Follow this article to identify active services using a CSV file and then perform a service edit to change the price.

B. Renew your proposals in bulk with the updated pricing

When you renew proposals with revised pricing, make sure the proposal starts on the date specified in your communications.

Learn more about renewing a proposal here.

Some additional tips for renewing a proposal

  • Use subscription or service names and list the inclusions – being more specific on inclusions in vendor services will help you if clients upgrade account tiers, too.

Use Service Terms for vendor services to specify that pricing is based on current vendor prices and how you will inform them of these changes. See below for an example to include for subscription prices. Find out more about service terms here.

Example service term for a subscription service

  • Subscription pricing is accurate at the date of issue of this contract and may be changed by the vendor during the term of the contract.
  • If a change occurs in vendor pricing, we will inform you in writing (email) of this before the next billing period affected by the change and will/will not require a formal scope change (new letter) to be signed by you. Changes will take effect in the next billing period unless specified otherwise.

Why leave it there?

To book a 1:1 walk-through of Ignition with one of our product specialists

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