Today on the 5: Graphic design company Canva recently announced a fairly large price hike for many of their users that is being justified by the "value of our expanded product experience". This has understandably upset a lot of users and led to debate about what the true reason for the increase might be.
Ozone Nightmare
Debatable Value
Welcome to your Daily Five for Thursday, September 5th, 2024. I saw a news item. I went right by it over on Blue Sky. Somebody had posted it there because I incorrectly read what the percentage of the increase was about the news item. And this was in regards to the graphic design company Canva, who has recently told their, I don't know if you call them enterprise customers, but not the individual users as far as I could tell. I read through the Verge article. It was relatively unclear, but that some of their teams or workplace, basically enterprise or if you work for a company type of users, are going to be seeing somewhere in the neighborhood of a 300% price increase on what they're paying now to use that platform because they've added so many features and integrated so much generative AI that they feel that that price increase is justified. When I first saw the link on Blue Sky, I thought it said 30%, so I didn't pay much money. I thought, "Okay, well, that's not an insignificant price increase, but, you know, okay, 30%, I've seen that before." Then I saw that it was 300%, and I thought, "Wow, that can't possibly be right." But it is, not for everybody, but there are significant price hikes coming for people who are using Canva. Now, I've never really used Canva. I remember when they first started, they were positioned by many people as an alternative to Adobe, which has been an expensive product and product suite to use. But as I said, I've been an Adobe fan for a long time. But if Adobe came out and said, "We're going to increase the price by 300% on the Adobe Creative Cloud," you better believe I'd start figuring out how to use some different software to do what I do, even though I'm in Photoshop on an almost daily basis. There is no way that I would be able to justify a 300% price increase. Certainly not if Adobe was saying, "Well, it's because we've added AI," which they've already done. So, Canva apparently has changed what their focus is. Like I said, I haven't kept track of the company. Canva's an interesting outfit because I've never heard anything particularly bad about Canva, but I've also never heard anything particularly good about it. It seems like it existed in this middle space, which I think there's nothing wrong with, for people who had at least some design ambition, but really just didn't have the time or the knowledge to be able to really dive into it. Not everybody is going to spend three hours designing a logo. That's perfectly fine. Sometimes you just need to get something up and running, and if you have something you can use relatively inexpensively to get that done, nothing wrong with that. It's kind of like how you can build a website with something like Wix. If you don't want to learn HTML, you don't want to code the whole thing, or spend a bunch of time on it. So, the category itself, that's fine. I think that's necessary for people who, again, don't have the time or ability to do some of this stuff, but to come out with this big of a price increase and say it's because we're offering you so much and we've added generative AI, oh boy, that's going to be an interesting one to watch. Now, some people, including some people who post in the comments on the Verge article, are saying this is a bargaining tactic, that this is a way to make people outrage so that they can listen to their customers and back it down to say 100 or 150% increase on pricing. That could be, but I do genuinely wonder if this is more reflective of something, and I've done a couple of fives, I think we've said this, and other people have said the same thing, that there is going to be a price cliff coming, that a lot of these products are going to fall off of where they're going to have to start passing along the cost of these tools to the customer. We have been in a subsidy period for this stuff for a while where companies were saying, oh, here, use these tools, see all the stuff you can do with them. It's relatively cheap or free, and then once people started using them and they saw there was a market, now we're seeing the prices increase, and we're probably going to see more dramatic price increases, maybe not 300%, but that might not be far off the mark for what some of these companies are going to have to charge to recoup the investment or to use tools that other companies are making, and of course are going to be charging them for. So I don't know if this is purely a bargaining tactic. This might be something that is going to be, if again, not 300%, it might stay close to this because at some point these costs are going to have to be reckoned with, and the companies will not absorb them forever. We've seen this time and again, where a company comes out, they're covering, they're operating at a loss because they want people to start getting used to what they're selling or what they're offering, and then once they know they've got people locked in and people are used to it, they don't want to switch to another platform. Now they start ratcheting the price up. Granted, not usually this much all at once, but this is not exactly a playbook that we haven't seen used before. So it will be interesting to watch this. I am curious whether this ends up just being a really, really bad marketing tactic or bargaining tactic, I guess. I mean, don't get me wrong. Yes, hearing it's 100% versus 300% is something, but then in the back of your mind, you'll always have to wonder if they won't at some point jack it up that much. But I wonder if this isn't, in fact, a more accurate representation of what these tools are going to be costing these companies and through them, their customers will have to wait and see later.