![]() Futurum Group’s research director Keith Kirkpatrick said that customers will “not blink” at the price hikes as “large customers are unlikely to see actual net price increases of 9%, given their scale”.Īdditionally, the change in pricing is not going to affect enterprise customers who are locked in three-to-five-year deals with Salesforce. The price increases may have less of an effect on larger customers. ![]() “As a result, customers will continue to evaluate the number of licenses that they hold for Salesforce applications to ensure they are getting optimal value from the number of licenses they have,” Webber said. The increase in prices comes at a time when companies are trying to manage costs in an uncertain macroeconomic environment. Further, Benioff added that the company had put mechanisms in place to talk to investors and listen to their concerns before making changes in the company’s go-to-market strategy. “We needed to press the hyperspace button and bring the two-year goals forward quickly and exceed them,” Benioff said during the call, according to a transcript from Seeking Alpha. “When considering the general market conditions and the specific profit pressure that Salesforce is under, this price increase should not be too much of a surprise,” Herbert said.Īlthough strong user uptake of Tableau business intelligence and MuleSoft data automation and integration software fueled a surprising 14% year-over-year jump in revenue for Salesforce’s fourth quarter, the company underwent several tumultuous months starting late last year, as the company cut around 10% of its workforce, shut numerous offices, and saw co-CEO Bret Taylor and Slack CEO Stuart Butterfield step away from the company.ĭuring the earnings call for the recent quarter, CEO Marc Benioff said that Salesforce needed to “radically accelerate the transformation plan timeframe” as the company entered the fourth quarter. Oracle, for example, raised maintenance pricing by 8%, though it did not announce the increase publicly, Herbert noted. Meanwhile, other vendors increased prices without making public announcements. Software vendors generally put a halt on price hikes when Covid hit, but started increasing prices as the pandemic subsided, Herbert noted.įor example, Microsoft announced a price increase for its 365 suite in the range of 8%-20%, depending on the edition, in late 2021 SAP increased its maintenance pricing by up to 3.3% in late 2022 and Slack increased prices by 8%-9% around the same time. ![]() “We have seen a general rise in software prices coming out of the pandemic as inflation has put pressure on operating costs of technology vendors, and these costs still remain high,” said Liz Herbert, principal analyst at Forrester. Salesforce’s decision to raise the price of its software products starting in August can be attributed to a combination of factors, including inflation and pressure to fuel revenue after a pause in price hikes during the pandemic period - issues that are affecting other major technology suppliers, analysts said. ![]()
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