Vast majority of e-commerce businesses purchase products on a weekly or monthly basis and sell them every day. Most of such businesses can reap great benefits from adopting inventory tracking. In this post, we will cover the three most popular modern small business accounting packages and the most cost-effective way to implement inventory tracking in your company.
Xero, QuickBooks Online, and QuickBooks Desktop
Today the three most popular accounting software in the US are Xero, QuickBooks Online, and QuickBooks Desktop. The order in which we will review them is not indicative of their popularity. Rather, it is based on the lowest one-time payment allowing the buyer to start using the software right away. This doesn't take into account temporary discounts and promotions.
As of June 2020, the starting price of the three is the following:
Equal among equals?
It is worth mentioning that even for basic accounting purposes, without inventory, the introductory pricing above reflects the features each accounting package offers. Xero is the most basic of the three, lacking many advanced features. QuickBooks Online is the middle ground. While QuickBooks Desktop is the oldest and the most advanced package, offering seamless upgrade path to QuickBooks Desktop Enterprise Diamond.
In case you are interested, QuickBooks Desktop Enterprise Diamond will set you back $3825 per year. It has a number of advanced features, such as Advanced Inventory, which offers inventory tracking in multiple locations (warehouses) and bins (rows, shelves, or bins) among other things.
Inventory Tracking in Xero
Enough of the intoduction. Let's look at the costs of inventory management functionality using these three packages. The first one is Xero.
Xero does include inventory management in all its plans. However don't count on using Xero Early plan for any serious inventory tracking. The reason is that Xero Early includes only 5 invoices and bills per month, which is not enough for any more or less functioning business, not even talking about e-commerce. Thus the cheapest plan you can start with is Xero Growing, which costs $30 per month.
Inventory Tracking in QuickBooks Online
Next is QuickBooks Online. Inventory tracking is included only in QuickBooks Online Plus and QuickBooks Online Advanced. Since our goal is to find the cheapest option, we will choose QuickBooks Online Plus that costs $70 per month.
It is worth mentioning that out of the box, QuickBooks Online Plus includes significantly more features than Xero Growing, such as multi-currency, project tracking, classes, locations, and time tracking. Thus if you aim to compare apples to apples QuickBooks Online Plus has slightly more features than Xero Established, which costs $60 per month.
Inventory Tracking in QuickBooks Desktop
Finally QuickBooks Desktop. QuickBooks Desktop is similar to Xero because all versions of QuickBooks Desktop, even the cheapest one, QuickBooks Desktop Pro, include inventory tracking. As we wrote above, QuickBooks Desktop Pro costs $299.95 with a one-time purchase.
Total Cost of Ownership
Taking a simple look, it would seem like Xero is the best option for the low-cost inventory tracking. However, things are not that simple. Let's look at the total cost of ownership (TCO) over one and three years.
Important fact: QuickBooks Desktop will get bug fixes and updates for three years. After that you will have shell out for a new version.
In both cases, QuickBooks Desktop Pro looks as a much more attractive option. Over one year, Xero Growing will cost you approximately the same as QuickBooks Desktop Pro ($360 vs $300), and the online version of QuickBooks will be almost three times more expensive ($840). Over three years, QuickBooks Desktop Pro starts looking even better. While Xero Growing will cost you $1080, QuickBooks Online $2520, QuickBooks Desktop Pro will still cost you a mere $300.
|Xero Growing||QuickBooks Online Plus||QuickBooks Desktop Pro|
|Cost of ownership over 1 year||$360||$840||$300|
|Cost of ownership over 3 years||$1080||$2520||$300|
The Trick of QuickBooks Desktop
Being desktop accounting software, QuickBooks Desktop doesn't have recurrent subscription fees and can be purchased with a one-time payment.
The fact that QuickBooks Desktop does not live in the cloud may be a drawback for some businesses, but it also means that, unlike Xero and QuickBooks Online, you can buy QuickBooks Desktop in multiple brick and mortar and online stores. These online stores include not only Intuit itself, but also Amazon, BestBuy, Costco, Walmart to name a few.
Although Intuit's recommended price for QuickBooks Desktop Pro 2020 is $299.95, you can get this Desktop version from Amazon and other stores for as little as $189.99 (as of June 19, 2020).
Taking into account that Intuit will support QuickBooks Desktop 2020 for three years, you will get a fully functional accounting software with inventory tracking for just for $5 per month, based on ownership over 3 years.
Are you looking for the most cost effective solution to introduce proper inventory management to your e-commerce business? Do you want to have an easy upgrade path to QuickBooks Premier and eventually QuickBooks Desktop Enterprise in the future?
If your answer to both questions is yes, nothing beats QuickBooks Desktop Pro 2020.
What do you think? Did you find this post useful? Let us know in the comments section and thank you for stopping by!