Changes Coming to QuickBooks – The Accounting Technology Lab Podcast – July 2024

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Transcript (Note: There may be typos due to automated transcription errors.)

Brian F. Tankersley, CPA.CITP, CGMA  00:00

Welcome to the accounting Technology Lab sponsored by CPA practice advisor, with your hosts, Randy Johnston, and Brian Tankersley.

Randy Johnston  00:10

Today, welcome the accounting Technology Lab, Brian and I would like to talk to you about pending changes from Intuit, which they announced on June 10, new QuickBooks pricing changes. Now, there’s not only pricing changes, there’s also some other strategy changes in the organization. And I want to disclose that Brian and I recorded this podcast before scaling new heights, we expect that we’re going to talk to a lot of our professionals that are pro advisors that have sold these products for a lot of time, and we’ll probably get additional insights, we’ll have a future accounting Technology Lab to discuss that topic. But we thought that the breaking news of the QuickBooks changes were important enough to discuss today. So Brian, I know you’ve done a lot of processing on this and so forth. So what would you like our listeners to know? Well,

Brian F. Tankersley, CPA.CITP, CGMA  01:03

you know, every year into it raises prices. And so that’s this is not a huge shock. So we will kind of recap some of the some of the price increases. But the the major change that I kind of see here is that they seem to be kind of pulling away from the pro advisor channel, almost, you know, I, I’ll go over, I’ll highlight some very specific things associated with this. But it, you know, generally, I’ve been watching the social media reaction to this. And I will tell you that, that it is unfavorable, to say the least, okay? Again, this was in a blog post on the firm of the future website. But basically, what’s happening here is they are raising prices across the board between 10 and 20%, like they do every year. So in QuickBooks advanced is going from 200 to 235 plus the version that most of us use the only version that really has location and class tracking and some of the inventory and some of the major features that you need to do advanced things, it’s going to 99 a month, Essentials is 65 a month is going to get to 30 to 60 to 65 Simple starts going from 30 to 35 and self employed is going from 20 to 25. Now, this actually will take take effect for you know, for new subscriptions, or you know, for I guess for QBO self employed simple start essentials plus and advanced new subscriptions, or existing existing client builds subscriptions on August 1, the self employed existing subscriptions will get pushed through on August 15. And September 1, all the accountant billed subscriptions are going to go through here. So so that’s a again, I mean, that’s, that’s a pretty beefy price increase. And I don’t think it’s been that long since they raise price previously. You know, I remember it’s not been that long ago, that plus was $30 month. So you know, and that’s been years ago, but it’s not been that long ago. Now, when we look at the payroll pricing, the thing that’s really difficult here is the price per employee per month. That’s the piece that’s the you know, it’s the it’s the add ons, that’s kind of a challenge here. So payroll core is going to be $45 is going from $45 plus $6 per employee per month to $50 plus $6 per employee per month for premiums are going to $9 per employee per month. And for elite they’re going to $11 per employee per month. And again, those take those take effect for new subscriptions and client builds subscriptions August 1, for accountant build subscriptions on September 1.

Randy Johnston  03:56

And so Brian, each of those programs raised $5.45 to 50. For core a did 85 for premium and 125 to 130 for payroll elite. And on the base system. There’s no included employees, as I recall, is that correct? So basically, basically you have not only the core pricing, but for a very small payroll one or two, you’re gonna have pretty notable costs on the base system.

Brian F. Tankersley, CPA.CITP, CGMA  04:26

Yet, so Intuit is in the process of sunsetting, their desktop version of QuickBooks, of QuickBooks, you know, the QuickBooks Pro QuickBooks Premier QuickBooks Mac, you know, they switched it to subscription about a year or two ago, and they are now increasing prices aggressively as we expected they would okay now now they will actually stop selling new subscriptions to to QuickBooks Desktop at the end of July this year at the end of into its fiscal year. So that’s A that’s a pretty big deal that it won’t be available at any price to a new customer. However, starting October 1, the pricing on QuickBooks Pro Plus and Mac Plus is going from $649 to 999. Okay, and it’s not been that many years ago that this was a plus, or excuse me, the Pro was a 199 299 box you bought at Office Depot. And, and Premier Plus now is going from 949 for one user, to $1,400 for one user, okay. And you know, if you think about that, that $1,400, you know, you’re not that far away from the 200 a month that you have for mid market products with significantly more capability. So I just kind of call that out to you here. Because as we, as we saw with, with some of the other products they’ve killed off, the strategy appears to be that they’re going to price it until you scream, and then they’re going to keep pricing it until you switch to their cloud product. And that’s the that’s the that that looks like what they’re trying to do

Randy Johnston  06:06

here. Yeah. So Brian, I, you must have a beautiful crystal ball, because you had forecast that there would be price increases. I was surprised how substantial these were. Because

Brian F. Tankersley, CPA.CITP, CGMA  06:19

it’s actually surprised that they didn’t double it. Okay, I think I figured they would have taken a lesson from the from the Windows XP extensions, where it was 99 for the first year. And then 199, the second year, I was surprised that they didn’t go to 13 102,000. Honestly, on these. Yeah.

Randy Johnston  06:38

But for our listeners, these are pretty radical price moves. And we hope you’ve listened to this podcast in time that you can adjust your client base to get a lot of these in, because we’d already talked in a prior technology podcast about the discontinuation date of July 31, for the desktop products, leaving only enterprise as the primary. But now that they’re all subscription with notably increased dollars. You know, I understand the maneuver here, and that’s to get you over on QuickBooks Online. And the good news is, QuickBooks Online advanced, has gained features to make it more on par with QuickBooks Desktop, but still not 100% purity, but But

Brian F. Tankersley, CPA.CITP, CGMA  07:26

it’s 100 a month. So it’s not you know, this these days of accounting software being a, you know, a, a low percentage, you know, a very small percentage of what you charge is its are coming to a close, I guess.

Randy Johnston  07:46

Yeah, I think that’s probably true. And Brian, to your point on the mid markets, just to give our listeners a bit of a sense of this, you know, the primary mid market products, dynamics 365, Business, central sage intact, and NetSuite the dynamics 365 business, central pricing is commonly coming in at $70 per user per month. So, you know, when you start looking at mid market pricing in those ranges, that really does change the tone. And when we look at competitors for QuickBooks Desktop, here, I’ll just call out Saima and spire or accounting suite, if you want to SAS base product, those three products all have relatively good feature parity with QuickBooks Desktop, at radically lower price points. So we’ve already been listening to change. firms looking to change, and just not quite sure where to go.

Brian F. Tankersley, CPA.CITP, CGMA  08:49

Yeah, and I think I think Randy’s right to call out those solutions. You know, accounting suite, Spire, dynamics 365, Business Central, you know, and others because those are what we call prop solutions. Okay. And there, again, the the, the idea here is they’re kind of in the mezzanine between the entry level products that we have like QuickBooks, Xero and others, and the mid market products like NetSuite and an intact, where you’ve got to have a partner implement those things because of the sheer complexity and the number of options you have. So so it’s a, you know, that this this mezzanine of too big for QuickBooks, but not big enough for NetSuite yet, is is a real thing. And so we think, you know, we probably need to come back and talk about Prop solutions again, in the near future, just because I think, I think generally, that’s where a lot of folks are going to end up heading. And some of the solutions in there you’ve never heard of, or you don’t know much about, but they are the products that we wish we could have gotten from the major vendors as part of this transition.

Randy Johnston  10:01

Yeah, so Brian is correct here, because in this year Small Business Accounting presentation that he and I have written, we’re actually covering 22 Entry Level products. And in the mid market about 20. And you know, having just gone through NetSuite year end, I don’t consider myself a super negotiator. But in a half hour call with NetSuite, we wound up getting the better part of $125,000 concession. In a half hour negotiation, it was like,

Brian F. Tankersley, CPA.CITP, CGMA  10:36

now it was like three days before you’re in though, too, right? Oh, it

Randy Johnston  10:39

absolutely was, Brian,

Brian F. Tankersley, CPA.CITP, CGMA  10:41

I mean, I mean, so so this was, this was not something you should expect you’re going to be successful at, in in any time other than right around May 31.

Randy Johnston  10:50

Right. But the reason I bring that up is fiscal year ends on these public companies do make a difference on the timing of announcements, like we’re talking about with Intuit, or on the transactions of making a purchase. So again, we want you to start getting your spidey senses up. Because if you’re going to help clients, or you’re going to buy for yourself, you want to time your transactions.

Brian F. Tankersley, CPA.CITP, CGMA  11:16

Yeah. And so that means that if you have a particular product that’s favored, and you’re doing a selection, you may want to push out the selection and the implementation a little bit to get more into these windows, because the dealing is very real anyway, but let’s let’s get back to the to the QuickBooks accountant versions, you can see that the desktop accountant is going to $1,200 from 999, the pro advisor premier bundle, that is the base, just the base pro advisor bundle is is 999 versus 799. And then the enterprise bundle will the thing that I used to pay $300 for 15 years ago, is now $1,600. Okay, so it is gone from 1299 to 1599. This is the one that has, has Pro has, excuse me, has the accountant edition that has the enterprise accountant edition used to have point of sale, but that’s not a problem anymore. And and again, for one user, it’s $1,600. So they’re they’re pushing, especially accountants especially hard to get the heck out of desktop is my read on this. I mean, that 400 ollar increases. You know, that’s it’s not quite 30%, but it’s healthy.

Randy Johnston  12:29

And of course, Brian, as you pointed out correctly, October 124 is the timing on this. So with many of our listeners in the thick of tax season for these cutover dates, you know, the September one date that we talked about earlier in this podcast, the October one date, and so forth, those are all kind of in play.

Brian F. Tankersley, CPA.CITP, CGMA  12:49

Yeah. So anyway, there’s that. And now as we look at QuickBooks Enterprise, the, you know, the the big change here is that the pro advisor discount, the new Pro advisor discount is changing and on new, new additional enterprise subscriptions, there’s no discount off of retail. Okay. And so if I’m, you know, if I get into my Kremlinology here and my study of of winter into its track layer, Mountain View, ology, I guess you’d call it, I think that I don’t, I think that they’ve got another couple of a couple of three years to bring QuickBooks Online advanced up to the level of functionality that enterprise has. And I think once they do that, this product will be sunset as well. So I’m, as I’m looking at this, based on this move. I just can’t in good conscience, you know, when when I have people pick out accounting software, I haven’t picked out something, you know, you’ve taught me this, Randy, that, that when you pick out accounting software, you’re getting married for 10 years, and you need to expect a 10 year life. And the problem we’ve got here is that I think based on this, if I’m the oncologist looking at this, this product doesn’t have 10 years left to go. And so we’ve got to just acknowledge that, that this may not be a a solution, that you want to do new implementations on an ongoing basis. Now you don’t need to panic and dump it immediately. But I think you need to be thinking that there is going to have to be some kind of transaction to shift. I would my if I was if I made my best guess I’d say they’ll probably start the pricing freezes aggressively in two to three years. And it’ll probably be dead within seven. That’s my guess.

Randy Johnston  14:42

So that’s a that’s an interesting guest, Brian, and I was just reflecting on that because you’re absolutely right. I like seven to 10 year windows on any accounting software deployment. So then the next trick is, you know, how we get the data out of the systems. So we have recorded a other technology podcast on products like Cinder or transaction pro importer, or mini.

Brian F. Tankersley, CPA.CITP, CGMA  15:09

By the way, transaction Pro is owned by right works with own CPA practice advisor. And we were not, we get no editorial direction from the right works people at all. So we are editorially independent. But I will say transaction Pro, I say this as somebody that has never gotten a free copy of it, that has always paid good green money for it. Transaction Pro is an absolute lifesaver for these these desktop exports and extractions and setups and so forth.

Randy Johnston  15:40

Yeah, Brian, I appreciate that. Because you know that having watched me evolve over the last five to seven years, I’ve continued to maintain fierce independence. And there have been times when you know, we’ve watched others not disclose. So I appreciate your disclosure that, hey, we weren’t told to say that.

Brian F. Tankersley, CPA.CITP, CGMA  16:00

And I can tell you, I can tell you definitively that at the point. You know, we I can’t speak for you, Randy. But I can say that I would have to evaluate my continuation if I got aggressive editorial direction from from folks outside the outside the editorial command chain in this organization. And Gail would never do that Gail would never ever put us in that situation, she would resign before she would, she would fold like that.

Randy Johnston  16:30

Yep. So you know, the key here though, as you’re listening to us, we love the the company the product. But you know, this pricing is actually causing us to stop and think and many of you have made the jump to QuickBooks Online are quite satisfied with that environment. But for those of you who are still in the QuickBooks, desktop environment, these prices are aggressive. Frankly, even the prices in QuickBooks Online are aggressive.

Brian F. Tankersley, CPA.CITP, CGMA  16:56

And, and the hits just keep on common, because here’s the payroll pricing. And the basic payroll is going from 40 months to 55 a month. And they’re going from six per employee to seven per employee for the basic payroll again, where you do your own taxes. And then for the enhanced it is going from 55 a month to 70 a month, and then six to $7 in there. And so, you know, again, in their discounts, you can basically get get the whole year if you pay if you pay for 10 months, and you pay in advance. So it’s 550 annually versus 55 a month. But again, that’s that’s pretty significant there.

Randy Johnston  17:37

And you know, on that comment, Brian, you know, I understand the profitability to stockholders the responsibility there. But I would also say the other payroll competitors that Brian and I will point you to, many are owned by private equity now, and we have seen radical payroll price increases from almost every vendor that’s been purchased. So I’m not going to name names in this context. But we’ve seen payroll go from two to $4 cost to CPA firms to 10 to $12 Cost Per CPA firms. Well, you know, going from two to 12 just seems like a lot for not a lot more. The technology performance and all that stuff. That

Brian F. Tankersley, CPA.CITP, CGMA  18:27

pain requires some kind of pain reliever that comes with a prescription. I mean, that’s that’s not that’s not an over the counter problem. That’s a that’s a it’s time to think about. It’s time to rethink your life choices. At that point. Yeah.

Randy Johnston  18:42

So we will continue to talk to you about alternatives in this payroll. So Brian, again, sorry to interrupt your payroll conversation because you’re headed for the next one, which is got

Brian F. Tankersley, CPA.CITP, CGMA  18:53

legacy is to recommend the legacy payroll for unlimited goes from 850 annually to 11 1100 annually or again 85 A month or 210 a month, the direct deposit P is goes from $4 a month to $5 a month. The legacy enhanced payroll goes from 650 to 850 annually or 65 a month or 85 a month to again to four from four to $5. So, starting in January, there will be new fees applying when paying w two employees via direct deposit and QuickBooks legacy enhance so there are transaction fees to be named later. Okay. There’s also some ACH fees and this is the one that really kind of galls me, especially in the in the in the era of you know, and I hate to be the I hate to be a nattering nabobs of negativism here but I think that some of these changes are just because they can as opposed to be because they reflect any kind of change in the market. You know, for example, the ACH fee for new customers for desktop payments. So that is when you’re paying payables are going to go from $3 per transaction to 1%, with a cap of $15 per transaction for existing customers. For new customers, it’s going to be 1%. With no cap, okay? So this means that if you pay $10,000 to a vendor, like, you know, let’s say I got 50. Let’s say I got $10,000 in receivables from Ketu enterprises, and Randy wants to pay me that $10,000 via QuickBooks payments, it’s going to be $100 in expense for him to send me $10,000 via ACH. I mean, I think Western Union might be cheaper in that situation. I don’t know. It’s it’s that’s the that’s the part that I get, I guess we’re I guess we’re looking at here that I would I would call out to you here is that? I don’t think you know, in the past, you know, we used to have a saying in the banking, the banking it world that nobody ever got fired for buying IBM. Okay. And in the small business accounting world, nobody ever got fired for buying QuickBooks. Okay. But I think that I don’t think that we can, I think we’ve got to think differently today than we did in the past. And I think we’ve got to look at some of these features. Now, I hope that I hope that Intuit has some changes, or has some clarification that maybe we’re missing that we’re not seeing in the email that came out. You know, I hope that there’s something incorrect here that I’m not seeing, I’m

Randy Johnston  21:34

just reflecting on these ACH fees. Because, you know, if you were a local community bank, charging $100, for an ACH of $10,000, you’d lose a customer.

Brian F. Tankersley, CPA.CITP, CGMA  21:45

And you’d probably get a visit from the Federal Trade Commission to most

Randy Johnston  21:50

likely. So you know, I’m thinking about alternatives, which we talked about in prior podcasts like forwardly or other providers, like a quick fee as an example. And we know that burger Emilio Emilio, and you’re just, we can go on and on and on about the alternatives. And I know I’m understating it. But in a predecessor podcast, we also talked about the Fed now charges, and we know fed now may have per transaction costs of less than a dime. So I’m mentally thinking this through and saying, Oh, my pull my 1% No limit 1%

Brian F. Tankersley, CPA.CITP, CGMA  22:27

versus a dime. I mean, you know, there’s, that’s, that’s multiple orders of magnitude difference. And I get that you got to have margins. But, you know, there’s, there’s good sense to all things. Yeah,

Randy Johnston  22:40

yeah, I was gonna say, Brian and I probably are both capitalists, and we want everybody to make money. But we don’t particularly care for usury fees, you know, which could be happening

Brian F. Tankersley, CPA.CITP, CGMA  22:53

again. And the troubling part here is that this really is, is taking advantage of Main Street. And I am much more protective of Main Street than I am of Wall Street. You know, if, if we were talking about SAP taking advantage of the Fortune 500. Hey, your big boys figure it out. Okay. But I feel much different about, especially in this private equity funded era about you know, about Main Street. And so I hope you see from this this conversation that we try to call it the way we see it, we may see it differently than you. And we we hope we do. We hope you do. Okay, you you need to do your own thing. But what what we want you to see is that is that this is a we’re seeing enough, enough frustration, out of the people that we talked to that knew this was coming and engage and the people that we’re seeing on social media, that are Intuit advocates that are maybe not as not as much of advocates as they were in the past. I think you’re seeing a shift in the industry, where QuickBooks may no longer be the default. And I don’t know what the replacement is yet. But there will be a replacement. And you know, maybe it’s zero, maybe it’s accounting suite, maybe it’s FreshBooks. Maybe it’s you know, I don’t know what it’s going. But I think I think it’s time I think there are enough people especially at that accounting, accounting mashup, the thought leader event that there were the practitioners in there, were just seething. I mean, the anger was you can see the shift in their faces when they spoke about about frustrations with their cast platforms. And so I think there’s a I think we live in interesting times to go back to our ancient Chinese person we spoke of earlier.

Randy Johnston  24:54

Yeah, and Brian, this is like the sixth time I’ve thought about it. Better podcast But My grace is who you’re going to call

Brian F. Tankersley, CPA.CITP, CGMA  25:02

right? After the Ghostbusters problem, baby. So

Randy Johnston  25:06

as it turns out, Brian and I are going to do the best we can to be the Ghostbusters for you, because we’re going to try to give you alternatives. Not saying you should adopt those alternatives, but we want you to be aware of choices that might benefit you and your clients.

Brian F. Tankersley, CPA.CITP, CGMA  25:23

And I hope you see that we will always call it the way we see it, even if that is not popular. And even if that is not to our own personal advantage. We are we are independent, and we’re going to call it the way we see it every day. Or I’ll go home and play with my dogs and my bees.

Randy Johnston  25:46

Well, I almost hate as a parting thought you’ve done such a nice job of summarizing the issues and illustrating those. Obviously, we’re going to get more education. This is just based on the email announcement of June 10, sent by Intuit from the Tucson group, you should look in your email for that details. But we thought that this summary explained in the accounting technology podcast would be more clear and give you a little bit of tone because if you’re busy, you might have just looked at that and said Oh price increases no big deal. Maybe it is a big deal.

Brian F. Tankersley, CPA.CITP, CGMA  26:27

These these are not normal price increases.

Randy Johnston  26:32

Well, thank you. We appreciate you being with us for another accounting technology podcast. We’ll come back and be defenders of the galaxy with you next episodes.

Brian F. Tankersley, CPA.CITP, CGMA  26:44

Randy That’s no moon.

Randy Johnston  26:49

Best all of you.

Brian F. Tankersley, CPA.CITP, CGMA  26:53 Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab, from CPA practice advisor. Have a great week