How an increase in accounting software pricing affects small businesses

Small businesses play a vital role in the US economy, generating two-thirds of the new net jobs and driving innovation while strengthening local communities. A recent report shows that they account for 44% of the country's economic activity. While they contribute positively to economic growth, they also suffer quite a lot during economic fluctuations—especially price hikes. From rising operational costs to increased loan repayment pressure, small businesses can be pushed to the brink of survival.

Accounting software has become a vital part of businesses, regardless of the organization's size. In fact, subscribing to accounting software is essential for streamlining financial processes. Businesses frequently find themselves caught off guard by sudden price increases, extra fees for previously included features, and a rise in subscription costs without adequate communication. In certain cases, the price hikes are introduced under the guise of upgrades or new features, such as add-ons, security enhancements, or AI-powered automation.

Impact of accounting software price increases

A sudden price hike is not just startling; it can disrupt the financial plan the business set for the month or year. Imagine allocating a specific budget for accounting software and planning other expenses accordingly only to face an unexpected increase in the price. This forces businesses to reevaluate their finances, and they often end up spending more than planned. Since accounting software is essential, you're left with no other option but to either agree with the price change or find an alternative platform.

Dealing with unforeseen price increases

A sudden rise in subscription costs can feel overwhelming, but understanding when and how to act can help mitigate the impact.

At first, a price increase may not seem significant, but over time, a constant increase in pricing can create financial strain. For instance, if an accounting software company raises its price by 9% in 2024 and then by another 8% in 2025, these compounded increases can negatively affect cash flow. Evaluating the long-term financial consequences is crucial when choosing the right software.

You also need to understand the importance of a particular feature and its impact on your business. For instance, an accounting software provider might have initially offered a free AI-powered service but later introduced a charge for it after the promotional period. In such cases, you have to evaluate whether the feature remains essential and determine the right time to opt out.

Conduct thorough research before selecting accounting software for your business. Compare different products to determine which one best suits your needs. If you have already purchased software and find the pricing unreasonable, identify the right time to switch to a more transparent and fairly priced alternative. Selecting the right software is crucial, as it significantly impacts the efficiency of your accounting process.

If there is a sudden increase or change in pricing, reach out to your provider to enquire about any price caps, exemptions, or downgrade options.

Having said that, there are affordable yet powerful software options in the market that provide a perfect balance between price and capabilities.

Why Zoho Books can be a better option

Zoho Books offers plans and features tailored to all types of businesses, starting with a free option and paid plans from just $15 a year. Over the past four years, our prices haven’t increased—instead, we have expanded the features to deliver more value at an affordable cost.

Even during the last price adjustment, a free plan was introduced for small businesses. Check out how Zoho Books can help you streamline your accounting process and also stay compliant at a reasonable price.