Brendan Woods: … the next thing we said was, what's the pricing in the market for other solutions that are available. And what we started to see was that some people were unhappy or were struggling with the justification of some of the pricing of other solutions. And mostly I think that was down to the fact that they were generally priced, in what I would describe as the most traditional SAS model, which is every company, gets put on the system on a particular subscription level based on how much volume they're using. So in our case, it tends to be based on document volume in other SAS applications, it could be based on number of seats or users or whatever, or gigabytes of data, that kind of thing. But in our case, the thing was you had to choose logical breaks to say, okay well that's our first tier, It’s going to be 50 documents a month. And the second year would be a hundred a month, 200 and so forth.

And that makes sense except where you are in a practice, and you might be providing this as an outsource service, right? So you're now consuming the cost of this solution. You're not necessarily having your clients subscribed directly in doing so. You can have a hundred clients that you go, I think, and multiple concerns too. And they can be averaging 60, 70 bills or receipts a month. But the problem is the way the breaks went. Each one of those clients would have to go on to a 100 documents subscription because 50 wasn't enough. And if you're only using 60 or 70, you're actually wasting 30 to 40% of your spend on every single client.

Now that's okay if you're one SME and you're paying 20 bucks and you know, if that saves you from spending two hours typing up bills and receipts every Friday evening, when you've rather be spending time with your kids… fantastic. No, one's going to complain, but they didn't get to use every credit or not many. But if you're bookkeeping practice and you've got this a hundred times over and it is your direct task to provision a service, i.e. the bookkeeping service, it does matter. So we said, okay, this doesn't make a lot of sense. If I was the bookkeeper, I'd be upset by this. So we decided to do our pricing in such a way that we isolated the subscription and waste from what companies it was being used on. So if someone subscribed to a hundred documents a month or 500 a month, we didn't wouldn't ring-fence those documents to particular companies. So you could have 500 documents a month as your subscription, but you could be using that across 50 clients if you wanted to. And the real benefit of that, I mean, we knew that the upside of that was that accountants would love it, right? It was a really fair pricing model. It meant that if we were say for what you're using,

Blake Oliver: Exactly, you're paying for what you're using.

Brendan Woods: Exactly, you’re paying for what you’re using, you’re only paying for that. If we save you lots of time, or if we save your time, a unitized basis on how many documents you now no longer have to type up, or we charge a small fraction of what it would normally cost to do that normally. Well then it's a no-brainer, it just makes sense.

And now at the same time, we knew that unlike all of our competitors, where they were getting 30 to 40% of the revenue from no work, it was going to be tougher for us on margins. You know, we were going to have to be efficient, but at the same time, thankfully, it did work out well in our favour. We now have over 2000 bookkeeping practices using AutoEntry.

And I think through those, we have 64,000 SMEs set up on the system (over 250,000 in 2020). So it's been really really good. I mean, that's just over two years and people really really gave us a lot of credit for that pricing model. They really appreciated that it was fair. It made sense. It gives them the usage reports as well. So they can run a report and see how many credits are being consumed by each of their clients, if they want to rebuild in a way that correlates to that, that's up to them. And it just, it just seemed very fair and everybody liked it. So that was one of the big things we did differently. The upside, which was really nice, was that we were talking to some customers or prospects let's say, at that time who may have been using a competitor solution.

I can think of one example, and he said “look, I've only got a handful of clients on your competitor's solution. So you don't need to drive back to me and do a big demo. I'm not going to be a big win, I’ll be a small spender anyway”. And I said, well we're just launching, I'd like to get your feedback and really understand what you think of it, given that you've already got the experience of using our main competitors solution. So I went out and gave him the demo.

He said, right, it looks really good. I'm happy to get the guys to try it out on a client or two and see how it goes. So we did that and within a few weeks he subscribed and he moved his clients over. And I was delighted naturally, but what I was not prepared for or what I was particularly surprised by was that about three months later, when I looked at his account and I was about to get in touch with him again, I looked at his counters to make sure that they were still going well, there was still using it. You know, that they hadn't had any support issues. And I realized that 43 clients on the system, I was thinking, I’m sure he told me that me you had like five or six of those. So when I spoke to him that day, I said, “Gary I’m convinced you only told me you only had half a dozen bookkeeping clients. And most of your work was audit. And he said, “Oh, I don't know. We have quite a lot. It was just that we only had five or six on the other solution”. And the reason was they felt they had to make a decision with each client, whether it made sense to put them on because the minimum was going to be 50 documents. And he said a lot of these clients that could be daily rate contractors, even software developers who are more like acting as self-employed people, but they have little or no expenses. I mean, they've very few receipts. So why would I put someone on to a solution that would automate the capture receipts when they only have five or 10 or 20 when I was to pay for 50?

So he said, “what we love about AutoEntry is this policy model. We can absolutely put every one of our clients on the system, because if they use only five receipts, that's all we're paying for. And it means then we also end up with a standard operating procedure in the practice and everybody gets treated the same way every client is dealt with in the same way. So we have AutoEntry for everyone, the rules that it builds up, the fact that it learns how everything that's analyzed in terms of different vendors for different things means that the bookkeepers don't even have to spend as much time thinking about it. They used to have situations where there was certain bookkeepers that would generally do the accounts for certain clients because they understood the supplier base. Whereas with this, they were like ‘we don't really need that anymore because the only decisions that have to be made are on new vendors’. So the vendors that the system hasn't seen before.

Blake Oliver: I love that pricing. And as an accountant who has done outsource accounting, I can tell you, it's a terrible dilemma when you have to decide, does this client have enough volume to put on the solution? Right. And it's much better when you can just put them all on something and you know, you just pay for it if you use it.

Brendan Woods: Yeah, that is what we did. And not having to make a decision about whether the client is suitable or not is one thing. And other practices have the problem that they assumed the client was more than covered in 50 documents a month and quoted the cost of adding that, capture solution to the their monthly bill, I'd say, let's say it's $15, whatever it was. But the problem was within a couple of months, they realize actually that was just quite a couple of months. And now they're really doing a hundred documents or close to a hundred documents about certainly over 50, meaning that the practice was now paying $30 a month for the solution, even though they'd quoted the client, it should be 15. So the client was, was going to get upset a couple of months later when they're suddenly getting charged more than there were initially product or the practice was going to have to just kind of absorb some of that cost.

Whereas with ours, they can either re-bill it in a unitized way and just show the report or because we were generally very cheap, they just absorbed it entirely. And they, they just said, you know, we're not even going to present this additional cost of the client and we're the soak it all up because if it's five receipts a month, it's nothing, probably like a dollar or little over, it's not relevant. But the guys who are using fifty or a hundred, relative to what it costs to use the service, most of them generally didn't pass on the cost and that sort of direct way.

Blake Oliver: Well Brendan, that's about all the time we've got today. And I really appreciate you taking the time, um, to, to talk to us and tell us about AutoEntry.