Salesforce Raises Prices for First Time in 7 Years

digiflowz Business Blog Post

[ad_1]

Salesforce, which produces customer experience and marketing software, has announced its first list price increase in seven years for some of those tools. Salesforce, which has had a challenging 2023 thanks to company layoffs and economic turbulence, announced the news in a post July 11.

The price increases — an average of 9% — will take effect in August and affect products across Sales Cloud, Service Cloud, Marketing Cloud, Industries and Tableau. Within the Sales Cloud is the world’s No. 1-used customer relationship management (CRM) system, Salesforce CRM.

Rising Prices as Generative AI Innovation Takes Shape

Salesforce smartly turned the news into positives this week, focusing on how long it’s been since it raised list prices. It didn’t say specifically if it’s raised prices in other arenas or in other ways. It stressed its last list price increase was seven years ago, “and since then the company has delivered 22 new releases, thousands of new features — including recent generative AI innovations — and invested more than $20 billion in research and development,” Salesforce officials wrote.

It’s certainly true. Salesforce has been expanding its generative AI toolset, just last month unveiling a duo of new, innovative AI-powered tools designed with marketers in mind — Marketing GPT, which leverages generative AI to craft customized campaigns, and Commerce GPT, aimed at assisting brands in providing highly personalized shopping experiences.

But it also has been stressed by the economy. At the beginning of 2023, Salesforce CEO Marc Benioff admitted the company over-hired during the COVID-19 pandemic. That led to Salesforce cutting 10% of its workforce in January, or around 8,000 employees, according to CEO Benioff’s Jan. 4 letter to employees. As of Jan. 31, 2023, Salesforce had 79,390 employees.

Benioff, whose company also bought Slack for $27.7 million in 2021, took responsibility for the layoffs. “I’ve been thinking a lot about how we came to this moment,” Benioff wrote in January. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”

It didn’t get better later in the year as reports surfaced over unhappy employees at Salesforce. Salesforce reported May 31 its Q1 fiscal results, citing revenue of $8.25 billion, up 11% year over year.

Related Article: Salesforce Expands AI Arsenal With New Marketing Tools and Partnerships

Tech Companies Feeling the Economic Pinch With Layoffs

Salesforce isn’t the only tech company pressured by a lagging economy. Tech layoffs were the news of the day, it seemed, in the first quarter of 2023. According to layoffs.fyi, technology companies have laid off 217,633 employees at 857 tech companies over the first half of the year. Last year, the total tech-layoff numbers were 164,709 employees at 1,058 tech companies.

And Salesforce naturally isn’t alone in price increases for marketing and customer experience software companies. Adobe users lamented over a 33% increase in Adobe Acrobat Pro for 2023, going from $179.88 to $239.88. Oracle saw price changes in its Oracle Java SE subscription. Even smaller, more niche companies like Otter.ai saw price increases within the past year.

Related Article: Salesforce Introduces AI Cloud: Generative AI Infusion Into CRM

Specifics Behind Salesforce’s Price Increase

As for Salesforce’s new list pricing, it will go into effect globally for new customers and existing customers purchasing new clouds in August 2023. The new list prices will be:

Professional Edition $80 (up $5)
Enterprise Edition $165 (up $15)
Unlimited Edition $330 (up $30)

Similar list price increases will go into effect for Industries, Marketing Cloud Engagement and Account Engagement, CRM Analytics and Tableau, according to Salesforce officials.

Ben McCarthy, who authors the popular Salesforce blog, Salesforce Ben, wrote this week that since the last price increase seven years ago, there has been a “huge amount of development on the platform.” He cited a fully integrated Lightning Platform, embedded Einstein AI features, DevOps Center, native Slack Apps, Flow and features such as Pipeline Inspection.

“While times are tough for the global economy, Salesforce still has to deal with activist investors circling, which I imagine could have played a part in this pricing decision,” McCarthy wrote. “Although, since better than expected quarterly results in February and May, activist investors have cut Salesforce some ‘Slack.'”

McCarthy also noted the increase “conveniently arrives at the start of a new quarter, which will most likely push many slow deals over the line this month to avoid any price increases in the future.” He encourages customer experience and marketing software users to note that this is a “list price increase, and depending on the size of your company, and how many Salesforce clouds you have purchased, your company will probably have a healthy discount off of the list price.”

Have a tip to share with our editorial team? Drop us a line: