Since we launched our beta service in January 2018, we’ve opened over 5,000 sole trader accounts.We started in beta to make sure we could iron out any kinks, act on feedback and ensure we were delivering on our promise to free our customers from business admin.Now, almost one year on, it’s time to leave our beta behind us and start the next chapter of our journey.Our plan has been for Coconut to operate on a subscription model, in line with the published pricing on our website.Now that we have a better understanding of how you use Coconut and the costs of operating our service, we’ve made some updates to the pricing model - all of which can be found below.We want to keep our pricing transparent, simple and sustainable.
Why we have a subscription model
The traditional banking model is to take deposits (sometimes offering interest) and lend your deposits to other customers at a profit in the form of loans.This is a model that banks have operated on for centuries.The result has been current accounts that don’t really help you manage your money, because that’s not how banks make money. In fact, they actually profit when you don’t manage your money well.Pressure from fintechs is slowly making the traditional banks pay attention to the fact that they have a responsibility and opportunity to help people manage their money, rather than simply storing it and lending it.At Coconut, our mission is to free you from business admin by combining banking and accounting into one simple product.We want our pricing to connect with that mission. It’s the best measurement of whether we’re delivering on our promise and creating value for our customers. By charging a subscription for the service, we keep our team focused on delivering that value.Despite Coconut being a current account at its core, we see the benefits we offer as much closer to those that accounting software provides. Accounting software products generally charge a subscription fee too, because they’re ultimately trying to solve the same problem - the way we manage our money as small business owners.
Our new pricing
You may have seen our planned pricing on our website already, and the new pricing is similar - a free tier (Start), with all the essentials you need when you’re starting out or running a part-time business. And a paid tier (Grow), a monthly subscription that includes extra features and higher usage, suited to people running small businesses full time.Here we’ve explained the updates to our pricing with a summary at the end.
No longer based on bank transfers
In our original pricing, we included some limits on bank transfers in and out. This was because there is a cost to us for each transfer.However, people have found this pretty confusing.Plus, bank transfers aren’t the reason people use the product. We’ve got much more useful features than that, like automated bookkeeping and tax estimates.So we’ve decided to remove these limits and fees from our pricing.
Foreign Currency Exchange - 2% on the Start tier
Card purchases in foreign currencies represent about 10% of our total transactions, but make up over 50% of the cost of card transactions.Card purchases in currencies other than Pounds Sterling attract additional charges from our payments processor and also Mastercard for accessing their global payments network.To help make our Start plan sustainable, we’re introducing a 2% foreign currency exchange fee on card purchases. Traditional banks tend to charge between 2.75-3%, but we've kept this as close to cost as possible.On our Grow plan, however, we’ll be keeping this at 0%.
ATM network providers charge us when you withdraw cash to cover the costs of operating the cash machines.With this in mind, we’ll be keeping our £1 charge on cash withdrawals in our new pricing.
Coconut’s invoicing tool is the most powerful on the market. As well as being quick and easy to use, it's the first invoicing tool that matches the payment with the invoice automatically, eliminating the bookkeeping. It also lets you do things like keep track of the time spent working for a particular client by creating drafts and updating them as and when you need.We’re going to make this feature unlimited on the Grow plan. On the Start plan, you’ll be able to send up to 3 invoices each month.As we add more features, we’ll be adding extra features to the Grow plan, whilst offering the essentials you need to get started in the Start plan. This will always be set out on the pricing page on our site, and in your Coconut app.
Some of you may have noticed we updated our Grow plan price from £4.95 to £5. We studied some research on whole number pricing and decided that using a round number better achieved our goal of keeping things simple and transparent.
Summary of pricing
Here’s a summary of our new pricing:
If you’re an existing customer, you’ll have received an email from us explaining exactly how this affects you, and the additional benefits you’ll receive.
This new pricing is effective from 31st March 2019. You can read the full updated terms and conditions here.
2019 is set to be a big year, with a lot of exciting updates on the roadmap. By launching our subscription model we’re able to invest more in the product, creating an even better service for everyone. Like with anything we do, we encourage any questions and feedback. We look forward to hearing from you.