Salesforce has announced that it will implement its first price increase in seven years. Starting from August, some of its cloud and marketing tools will see an average price hike of 9%. This news has caused a nearly 4% surge in Salesforce shares during early trading.
The decision to raise prices comes as Salesforce, along with other technology companies, is investing in generative artificial intelligence (AI) capabilities for its products and services. Over the past seven years, Salesforce has allocated more than $20 billion towards research and development, focusing on adding new features, including generative AI tools, to its software.
This price increase also coincides with a slowdown in revenue growth for cloud services, which experienced significant expansion during the pandemic lockdown. Major players in the cloud industry, such as Microsoft, Amazon.com, and Alphabet, have been facing pressure as enterprise clients seek to optimise their cloud spending amidst rising borrowing costs.
Salesforce’s new pricing structure will apply to both new and existing customers of Tableau, Sales Cloud, Service Cloud, Marketing Cloud, and Industries. The company aims to strike a balance between providing enhanced features and addressing the evolving needs of its clients while maintaining its profitability.
