Salesforce Announces Prices Hike For The First Time In 7 Years

Salesforce, the leader of the CRM industry, announced a raise in its list prices across different product lines on an average of 9% per user per month on Tuesday. This revised pricing will come into effect from August 2023. 

For the first time in seven years, the Salesforce product’s pricing shows a considerable hike in list prices, reflecting its confidence in its market position and value proposition to customers.

Reasons Behind the Price Hike

Salesforce has been focused on increasing investments in new domains like Generative AI and introducing products like Einstein GPT, Sales GPT, Service GPT, and AI Cloud.

This price hike is reasonable past the addition of thousands of new features, 22 new releases, and investment in Research & Development of more than $20 billion since the last revision in its listed pricing in 2016.

Due to the high cost of computing resources needed to offer generative AI features, Salesforce said it would add extra charges, such as $360,000 per year for 50 users for its AI “Starter-Pack”.

Salesforce has posed the ever-increasing demand for their cloud-based solution during and after the pandemic as a major reason for their price revision. According to a source, they expect stagnant revenue growth to $26 billion in 2024 from $21.25 billion in 2023.

Revised Pricings: Effective from August 2023

The revised pricing will come into action in August 2023 globally for all existing and new customers looking to buy licenses of new clouds.

Here are the new list prices per month, per user:

• Professional Edition $80 (previously $75)
• Enterprise Edition $165 (previously $150)
• Unlimited Edition $330 (previously $300)

The starter package of Salesforce currently costs $25 per user per month. The Professional Edition adds more features, such as pipeline and forecast management, lead registration, one custom application per organization, meeting digest, the forecasting mobile app, sales orders, products and price books, quotes, chatter, five flows an organization can create, and other features.

The Enterprise Edition includes more features, such as more campaigns per opportunity, custom opportunity fields in forecasting, opportunity splits, enterprise territory management, advanced reporting features, unlimited flow creation, unlimited, customizable profiles and page layouts, and other features.

The Unlimited Edition offers additional features, such as sales insight, premier success plan, lead scoring, conversation insight, developer pro sandbox, and one full sandbox per organization.

Salesforce did not reveal the price increase for Industries, Marketing Cloud Engagement and Account Engagement, CRM Analytics, and Tableau. They only mention that the above products will have similar list price increases.

What’s in it for Customers?

The hike in Salesforce price will affect all the renewals and new purchases of various products like Sales Cloud, Service Cloud, Marketing Cloud, Tableau, and Salesforce Industries (Vlocity).

But let’s look at the positive side of this hike in prices:

• Salesforce’s existing customers will benefit from a two-year grace period before they start incurring the cost of increased prices based on their contracts with the company.
• The prices are increasing, which can be a great opportunity for customers depending on their size, industry, and use cases. Considering it as a smart investment, businesses can deploy Salesforce products with more capabilities and power of AI to grow their revenue, lower their costs, or enhance their efficiency.
• The prices can also inspire customers’ decisions about upgrading, expanding, or customizing their Salesforce products. Many businesses are open to spending more on new features or integrations, which they know will boost their business performance and competitiveness.
• Many customers are comfortable with this justified increment in increased price, knowing Salesforce will provide high-quality, reliable, and satisfying products in lieu. Salesforce has a strong reputation in the cloud software market and a loyal customer base. In addition, the company offers various customer loyalty incentives, discounts, and rewards to its existing customers to attract new ones.

Conclusion

Salesforce increasing its prices for the first time in these seven years is a bold step, indicating its trust among customers and confidence in products and positioning in the market.

The company said it has delivered thousands of new features and innovations to its customers since the last price change, especially in Generative AI.

The price hike will also help Salesforce cope with the rising costs and demand for cloud-based software solutions amid the pandemic and the post-pandemic recovery.