I’ve written before about Wave Accounting, a vendor that is hoping to turn SMB accounting software on its head by delivering a product at a zero price point and monetizing through the smart utilization of aggregate data. The jury is out as to SMBs appetite for their data being used, and whether it is viable to run a business purely monetized through targetted offers to customers byt anyway Wave is pressing along on their plans.

To this end they recently announced the acquisition of Small Payroll a small SaaS payroll application based in Canada. Small is going to be rebranded as Wave Payroll and rolled out to the US early next year. Judging by the specification, Small Payroll seems to tick most of the boxes that SMB users require. In particular it allows;

  • direct deposit to employees’ bank accounts
  • calculations of wages and overtime
  • withholding deductions; and monthly remitting to the government
  • income tax forms (including the Canadian T4) and Records of Employment

Small Payroll founder Sean Walberg correctly identifies a hole in the market for a very simple and easy to use payroll product. As he says;

I had worked at a big payroll company, so I understood what needed to be done. Even so, I found it to be a pain to use the government’s online calculators and then keep track of things on spreadsheets. And the payroll companies are too expensive, especially for the little guys

In a departure for Wave, the payroll component will be a charged product. Wave is saying that payroll will be charged at “a few dollars per employee per pay run”, that’s not overly clear but Wave are promising that pricing details will be forthcoming soon. What fascinates me beyond the cost however is whether or not this is a tacit admission by Wave that offers-based monetization isn’t a sustainable model and that the future for their model lies in offering charged add-on modules the fact that Wave is stating that “Wave Accounting and Wave Payroll will operate as complementary but separate applications. Wave Accounting will remain 100% free” suggests that may be the case. If this is indeed the case that then changes the story significantly and, in my view, lessens the marked point of difference that Wave currently enjoys. I wonder if this move isn’t somehow tied to their recent $5M funding round and a much closer look at their prospects from their VC backers.

Either way it is good to see Wave building out their offering – so many SMBs employ one or two staff and having an integrated payroll offering is a no-brainer.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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