Toronto-based Wave Financial is rolling out a new tiered pricing strategy that will see it begin to charge customers using its accounting and invoicing software.
To date, the H&R Block-owned FinTech firm has offered its accounting and invoicing tools for free, while charging for its payroll, payments, and tax coaching services. Going forward, Wave will still offer a free version of its money management software to small business customers, as well as a new paid monthly subscription plan, which will include access to more capabilities. Both will have optional add-ons for a fee.
Going forward, Wave will offer both free and paid versions of its money management software.
“Wave has been primarily a free business operating system for small businesses,” Wave CSO David Axler told BetaKit in an exclusive interview. “We’ll always have a free tier, but now there’ll be opportunities to be able to upgrade into areas or components that your business needs as you go from the start phase to survival and thriving.”
Amid the current economic environment, many firms in tech and beyond have hiked their pricing. Axler claimed that Wave’s move was not purely “reactive” to these conditions, but one it considered for some time and made sense for multiple reasons. He said this move represents a “sustainable way to grow Wave” and will enable it to invest more in premium features.
“It was time to take Wave from a startup designed to remove a barrier to entry for aspiring entrepreneurs to a purpose-driven, profitable, and sustainable company designed to support small business owners at every stage of their journey,” wrote Wave CEO Zahir Khoja in a blog post announcing the decision.
Beginning today, anyone signing up for or creating a new business on Wave will be able to choose between a free “Starter” plan and a paid “Pro” plan that costs $20 CAD per month. For the following four months, nothing will change for current Wave customers. During this time, Wave intends to test and optimize its plans before rolling them out to existing clients.
Despite this shift, Axler said that Wave plans to continue providing an easy-to-use operating system for small businesses. “That’s not changing, but what we do want to be able to do is invest in those experiences which previously didn’t really map to our business model.”
“Our move to a subscription model, a key component of software-as-a-service, will help us drive growth and reinvest in our products, ultimately helping us understand and serve our customers even better,” argued Khoja.
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Wave, which provides accounting, bookkeeping, invoicing, and payment solutions to small businesses, was founded in 2009 by Kirk Simpson (now of Toronto-based identity verification platform Confirm) and James Lochrie (now of Calgary VC Thin Air Labs). Ten years after its launch, Wave was acquired by international tax preparation firm H&R Block for $537 million in what was then one of the largest-ever Canadian tech exits.
Khoja, formerly of Mastercard and Afterpay, took over as Wave’s CEO when Simpson stepped down in mid-2022. At the time, Wave had recently reached $100 million in annual revenue.
Last March, Wave laid off approximately 50 employees or 14 percent of its team. In a statement shared with BetaKit at the time, Khoja noted that this staff reduction came as part of a push to match the company’s structure with its long-term strategy and align its workforce with the areas it plans to focus on, describing it as “an important step” in Wave’s growth.
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In 2023, Wave released its first paid, premium offering for receipts and expense management. According to Axler, customer pickup and feedback to it was strong, which “further validated” the opportunity Wave saw to launch a more fulsome tiered pricing option.
According to Axler, in connection with these cuts and its move towards tiered pricing, Wave also made tweaks to its product suite last year but has not undergone any additional layoffs since then. Previously, Wave offered a banking product in the US, which it sunset as its primary focus has shifted from financial services towards improving small business workflow.
“We’ll also continue to offer financial services, but a diversification of how we monetize in our business and what we offer to small business owners,” said Axler,
Feature image courtesy Pentacon Group.