Why is Salesforce hiking prices, and how does it affect customers?
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
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.
“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.
Software vendors generally put a halt on price hikes when Covid hit, but started increasing prices as the pandemic subsided, Herbert noted.
For 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. Meanwhile, other vendors increased prices without making public announcements. Oracle, for example, raised maintenance pricing by 8%, though it did not announce the increase publicly, Herbert noted.
“We are also seeing some pricing changes anecdotally, for example, one client told us they were facing more than a 25% increase in their Citrix renewal, and another cited approximately a 10% increase in their Adobe deal related to a consumer price index (CPI) clause,” Herbert said.
Salesforce, according to a company blog post published on Tuesday, said that it would be increasing prices across Sales Cloud, Service Cloud, Marketing Cloud, Industries, and Tableau by an average of 9% from August, after seven years of no price hikes.
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