Salesforce discloses what it says is its first list-price hike in seven years
Shares of Salesforce Inc. were getting a boost in Tuesday morning action after the company announced what it said were its first price increases in seven years.
The software giant will boost prices by 9% across its Sales Cloud, Service Cloud, Marketing Cloud, Industries and Tableau products, with the changes slated to take effect in August.
The new list prices will rise to $80 from $75 for Professional Edition, to $165 from $150 for Enterprise Edition and to $330 from $300 for Unlimited Edition, Salesforce CRM, +3.93% said in an update posted to its corporate site.
Salesforce shares, which recently changed hands just south of $218 and up 2.4% in Tuesday morning action, were jockeying to be the biggest gainer of the day within the Dow Jones Industrial Average DJIA, +0.93%, after rising as much as 4.5% earlier in the session. Shares of 3M Co. MMM, +4.87%, upgraded at BofA Global Research, were up 3.3% in morning action.
“While there will clearly be some complaints from customers about the price increase, after a seven-year hiatus, we believe that a 9% increase is pretty reasonable given that other SaaS [software-as-a-service] companies have passed through annual increases in the 4-5% range,” Evercore ISI’s Kirk Materne wrote in a note to clients.
Materne flagged that, for big customers and those adding new modules, “the net impact will not be anywhere near 9%.” Materne wrote that he nonetheless thinks Salesforce’s pricing moves will serve as “a bit of a tailwind” for the company heading into the second half of fiscal 2024 and the first half of fiscal 2025.
“While the core of the CRM bull case remains centered on the continued push higher in operating margins (and [free-cash flow]/share growth), we believe this was a sensible approach to pricing, especially in front of a new set of AI-infused products that are scheduled for release later in CY23,” Materne continued.
Salesforce shares were rallying toward a nearly six-week high Tuesday.