One year ago, Expensify raised prices — the first time, ever — in order to get profitable. That worked (thanks everyone!), but today is very different. Today we are changing pricing in order to lay a foundation for a simpler and better product, even though the net effect of this change on our total revenue will be neutral. This new pricing scheme is in effect today, and will first affect the 7/1 billing cycle.
Most customers will only be marginally affected — and many will see their price go down. Those who do see their price go up are being given 12 months to get comfortable. But everybody will see immediate benefits, and those benefits will compound over time as our new “realtime expense management” vision comes to fruition.
So that’s the long and short of it, and the new price is fully described here. But if you care to know how we came up with it, read on:
Why do “realtime expense reports” necessitate this change?
Anybody who hangs out at Expensify HQ for long will tell you we’re hard at work reinventing the core experience of expense management into something we call “realtime expense reports”. More details will be going public soon, but a key part of this experience is that the whole notion of “submitting a report” — historically the singlemost important function in the expense management process — is relegated to the dustbin of history. Employees don’t like to do it, accountants don’t like waiting for employees to do it: nobody likes to freakin’ do it. So coming very soon, you won’t need to.
There’s one slight catch: the main thing we charge for today is… submitting a report. The very thing we’re about to deprecate. So we need to change pricing somehow. Given this unavoidable change, we’ve opted to wrap in a few other changes we’ve wanted to make for a long time in order to get it all out of the way at once to minimize disruption. Those changes are:
1) Switch from $6/11 per “submitter” to $5/9 per “active user”
Before: From the beginning (at least, the beginning of when we charged at all) Expensify has charged “per submitter” — meaning, charging based on the number of people who submit expense reports in a given month. But actually, that’s not even strictly true: we charged based on the number of distinct people that were approved in a given month. It was a confusing concept to explain, and even them most people immediately forgot and just assumed we charged for every active user.
Now: So we’re going to switch and just do what people assume we do: charge for anybody who uses Expensify to process expense reports. Personal use is just as free as before, but now anybody who creates, edits, submits, approves, reimburses, or exports a report is included in the policy’s “active seat” count — not just submitters. Clearly, this new, expanded notion of activity means most organizations will have more active seats — and barring some other change, the cost of Expensify would go up. To avoid that, we’re offsetting this seat increase with what we estimate to be a matching price decrease: we’re reducing price ~18% to the nice round numbers of $5 and $9 per seat for Team and Corporate policies, respectively.
Example: Your company has 100 people, 50 of who submit expense reports every month, and 10 who approve them.
Before: 50 submitters x $6/submitter = $300
Now: 50 submitters + 10 approvers = 60 active seats x $5/seat = $300
2) Include unlimited SmartScan with every policy
Before: SmartScan is an absolutely amazing convenience, and for that we’ve always charged $0.20 per SmartScan (though every account got 10 for free every month). And in practice, most users didn’t actually need more than 10 so it worked out well. However, over time people became more and more comfortable scanning receipts, meaning the 10 free didn’t go as far as it did — and the $0.20 cost became a distraction.
Now: By popular demand, we’re very happy to finally do what we’ve been asked countless times for years: unlimited SmartScan at a fixed price. Everybody still gets 10 free SmartScans every month to use for their personal expenses, but now every SmartScan on a report linked to a paid policy is no extra charge. Previously, this “hidden cost” added about 17% to a typical company’s bill, so making it unlimited is equivalent to an average 17% discount — on top of the 18% discount described above. SmartScan it up, you deserve it!
Protip: Have no interest in expense reports but want to SmartScan a ton of receipts? Just get yourself a Team policy for $5/mo, and SmartScan to your heart’s content. That’s right: unlimited personal SmartScan for only $5/mo. Finally!
Example: You SmartScan 50 receipts a month.
Before: The first 10 are free, and you pay $0.20 x 40 = $8/mo
Now: You pay $5/mo for a single active user (you) on the Team plan.
3) Include Invoicing and Bill Processing with every policy
Before: A year ago we launched our Invoicing and Bill Processing feature, which allows you to send invoices (and collect online payment) or receive bills (to a firstname.lastname@example.org address), with a $15/mo “all you can eat” plan. This quickly became our fastest growing feature. However, it was always a pain to charge in a special way — we always wanted to somehow just bundle it with our main feature.
Now: So we did. Now you can send invoices or claim your @bills.expensify.com address using any Team/Corporate policy, and you’re billed for it just like for a report.
Example: You invoice 1-2 clients a month (the common case), and they approve and pay online via credit card.
Before: You paid a flat $15/mo.
Now: On the Team plan you pay $5 for yourself, and $5 for each recipient, for a total of $10-15/mo.
4) Switch from “account” plans to “policy” plans
Before: This is a subtle change, but previously you upgraded your own account — and every policy you owned gained the benefit of your upgraded account status. This worked well for a while, but had confusing edge cases: for example, previously it was impossible to own both a Team and Corporate policy in the same account. Granted, not many individual companies are configured this way, but as an increasing number of accounting firms signed up with a variety of customers (some on Team, some on Corporate), it’s become a real problem.
Now: Accordingly, now you don’t upgrade your individual account — you just create (or upgrade) a Team or Corporate policy. Incidentally, this also means there’s no such thing as a “Pro” plan anymore: all accounts are the same, and any functionality differences are based on whether the functionality is attached to the Team or Corporate policy. Then at the end of the month we’ll figure out all the active users across all the policies you own, and bill you accordingly. (Incidentally, we don’t “double dip” — a single user active on two policies is only paid for once, so feel free to create as many policies as you need to match your organization.)
Example: You own two policies, a Team and a Corporate. Alice submits to you on a Team policy, and Bob submits to you on a Corporate policy. Cathy submits two reports, one on Team, and one on Corporate. You approve all four reports. The active seats you are billed for are:
Alice: $5 (Team)
Bob: $9 (Corporate)
Cathy: $9 (Team and Corporate, but Corporate pricing wins)
You: $9 (same as Cathy, because you’re active on both)
5) Super streamline the Team plan
Before: Our Team plan was always intended to be the simplest thing we could imagine, for the smallest of companies. However, over time we just kept adding features — which sounds great in theory, but had the effect of just over-complicating the product. The result was people who didn’t really need certain features would enable them unnecessarily, creating a poor experience for all involved.
Now: Accordingly, we’ve removed a lot of functionality from the Team plan to keep it simple. Anybody using QuickBooks Online or Xero — Team is for you, and it’s more streamlined and less expensive than ever. Everyone else, please take a look at our Corporate policy, which has everything under the sun for only $9/user/mo. (And if you have over 1000 employees, write email@example.com so we can discuss our Enterprise options.)
6) Team customers have been auto-upgraded to Corporate
Simplifying the Team policy sounds all well and good by itself, but I need to be very upfront about a major consequence: everyone currently on Team has been automatically upgraded to Corporate. This was a weighty decision that I’m sure is going to be very controversial. But in the end, we determined it was impossible for us to know which customers were truly using functionality that is now only available on the Corporate policy, or who only needs the functionality now in Team. So to avoid any chance of breaking customers’ well-oiled workflows without warning, we’ve opted to upgrade all Team customers to Corporate (and encourage everybody to downgrade back to Team if they’re able) — thereby ensuring nobody will see functionality they depend on suddenly disappearing. But wait! Before writing in to complain about a bait-and-switch, please read the next bullet…
7) Discounts are immediate, but increases will be phased in over 12 months
Between the 18% reduction in the cost per seat, and the 17% discount by making SmartScan free, as best we can tell this should more than offset any increase in the number of seats caused by the new activity definition — so most customers should be unaffected by this change (or even see a price decrease). And those who are entitled to a discount will see it immediately, starting on the 7/1 bill.
But to soften the “sticker shock” to those Team customers who choose to stay on Corporate (or any customer who sees a price increase for any reason), we’re going to do something I don’t think I’ve ever seen done before, and that is: calculate a unique discount per customer that completely offsets any price increase, and then phase that discount out over the course of 12 months.
In essence, we’re going to calculate all 7/1 bills with two pricing plans: the old and the new. And for each customer, we’re calculating a unique discount that will completely offset the new price to match the old price, ensuring everybody will be billed on 7/1 for the exact same price as they would have been had we made no pricing changes at all. Then, over the next 12 months, we will gradually reduce that discount such that in a year, everybody will be on the new, standard price.
The goal is to ensure everyone will have had plenty of time to downgrade back to Team (if they’re able), get comfortable with the new price (which is still an incredible deal), or — if necessary — migrate to an alternative solution (though I hope this won’t be the case).
Example: You are a company with 50 submitters and 10 approvers. You were previously on Team, but have been auto-upgraded to Corporate — and you choose not to downgrade back to Team. The cost of Expensify with the old and new pricing plan would be:
Old: 50 submitters x $6 / Team submitter + 17% for SmartScan + $15 for invoicing = $366
New: (50 submitters + 10 approvers) x $9 / Corporate submitter = $540
To avoid any pricing disruption, this example company would be given a 32% discount, which will be gradually reduced over 12 months. This means that were every month to have exactly the same number of active users, you would pay:
2014/6/1 – $366 (old price)
2014/7/1 – $540 – 32% = $366 (discounted to be same as old price)
2014/8/1 – $540 – 30% = $380 (discount is gradually reduced every month)
2014/9/1 – $540 – 27% = $395
2015/6/1 – $540 – 3% = $525
2015/7/1 – $540 – 0% = $540 (standard price in 12 months)
And of course there are a ton of small details that I’m leaving out, but these are the big pieces. It’s a big change with a million moving pieces, and it’s all just a precursor to some even bigger changes on the way. Thanks for your patience and please excuse the dust. As always, we’re lucky to have the most awesome userbase a startup could ever hope for, and once again I appreciate you taking this change in stride. However, if you do have concerns, please write us at firstname.lastname@example.org and we’ll get them taken care of.
Thanks for everything, and I hope you’re as excited about the future of expense reports as we are. If not yet, you will be!
-david, Founder and CEO of Expensify