Last week, Neil Seekings, sales director of� The Lerryn Group and I had a backwards and forwardsing over email. He said:

We are launching a link for MyPAYE and the Sage 50 product family which will allow Sage clients to use MyPAYE online and through a small desktop app download pay data into Sage 50 this might cause a stir from Sage as no need for their payroll and support, plus we are white labelling the app for our accountant partners to sell on to their clients using MyPAYE. We feel it might also stir up the Hard line SaaS activists as we are moving best of both worlds with link to desk top app.

Maybe. It’s certainly an interesting move by a company better known for its larger scale business credentials. What does its mean? Apart from keeping the die-hard Sage 50 accounting types happy it means that for many of the smaller businesses prepared to use MyPAYE, they can make substantial savings. Sage payroll (before print costs) is going to set you back £45 per month including SageCover. MyPAYE costs £1/month/user or less. Even without SageCover, customers are looking at £22/month.

I am familiar with MyPAYE and while it is not the prettiest solution out there it does come with an HMRC accreditation.

MyPAYE is already integrated to e-conomic, Xero and Kashflow although those integrations don’t require a desktop app. Even so, Lerryn’s shot across Sage’s bows is another example of how vendors can get squeezed by those that are acting smarter. Why? Sage’s payroll business is one of its most profitable lines. Look at the ratio of maintenance (because that’s what it is with a few bells and whistles) to license: a tad over 51%. And that’s before we start talking about the paper business Sage has been running at huge margin for many a year.

If MyPAYE and Lerryn can make a living at a fraction of the price, then what does this mean for the long term Sage payroll business? Sage will claim brand leadership but it would be a foolish professional accountant who didn’t at least look at what MyPAYE can offer in the alternative.

The solution launches 1st April and yes, I did check. It is a fully functioning application.

Update: the Lerryn service costs £14.99 pa

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