- Startup Spells 🪄
- Posts
- Canva's 300% Price Hike: A Masterclass in Backtracking
Canva's 300% Price Hike: A Masterclass in Backtracking
PLUS: 4 Perspective Shifts by Dr.Kashey
Canva's 300% Price Hike: A Masterclass in Backtracking
In 2024, Canva, the all-in-one graphic design tool, made a big pricing change. They increased prices by 300%, pointing to the new AI features.
In the US, some Canva Teams users are reporting subscription increases from $120 per year for up to five users, to an eye-watering $500 per year. A 40 percent discount will be applied to bring that down to $300 for the first 12 months.
People got very upset. Many users voiced their anger. Some even left Canva after a decade. This bold move drew attention, to say the least.
Canva got users mad
Canva quietly introduced the teams plan in April 2024. They first talked about the changes via email in August 2024.
But because of the loud disapproval, they quickly backtracked on October 10, 2024.
Canva backtracking its pricing
They introduced a Pricing Promise to show they listened to their community.
Canva - Pricing Promise
They decided to keep the grandfather their old users. New customers, however, now pay a premium. Grandfathered pricing refers to a pricing model where existing customers are allowed to continue paying the same rate for a product or service, while new customers pay a higher rate. This approach is commonly used in SaaS when a company raises its prices, either due to inflation or to reflect increased costs. For Canva, the increase in costs was due to AI Image Generation.
Canva Pricing
This allows them to acquire new users while boosting their monthly recurring revenue (MRR).
Canva’s approach shows they considered things carefully. They waited to see how the changes would impact them. They evaluated what price is fair for users.
Alex Hormozi says the fastest way to scale a business is just to increase its prices.
Alex Hormozi - Increase Your Prices
Gumroad increased its fees to a flat 10% from a variable 2.9% to 9%. This resulted in the highest revenue in the company's history. It went from unprofitable to making 10s of millions of dollars per year.
With its Pricing Promise, Canva is now positioned to increase prices in the future to boost MRR. Their strategy follows a common playbook: start with low prices to gain market share, and then gradually increase prices once you dominate the market.
Canva's initial price hike was likely too aggressive, which they subsequently corrected but they can and will 100% try again.
Top Tweets of the day
1/
So my wife recently started going to my local gym's spin classes -- but there's a problem:
The classes get booked up quick and there's limited bikes. These other women are super fast at getting their reservation in!
But you know what they're not faster than? A GitHub action… x.com/i/web/status/1…
— Steve Bauman (@ste_bau)
6:50 PM • Dec 29, 2024
Learn to do basic web scraping with Replit or Val Town and you too can impress your girlfriend/boyfriend or husband/wife like this.
No better flex than this.
Best part is you don't even have to learn to code as nowadays AI has vision so you can just copy-paste the screenshot to do stuff like booking your Zumba classes or buying a sneaker to resell it for a markup.
2/
The largest meme pages are ran by cracked 16 year olds which you can buy for cheap. With the right strategy, you can easily 10x its value.
3/
Interesting to think about what SaaS is going to get hit hardest by how easy it is to build personal software now.
E.g. I'm never using Webflow or TypeForm again.
But I'd have an extremely hard time replacing @kit
— Nat Eliason (@nateliason)
3:49 PM • Dec 31, 2024
Templates are cooked for the do-ers (shoutout Pain & Gain.)
You can create a standalone beautiful website in a few prompts for <$100.
Remember, most people use your product for only 2 to 4 features they need. And they can now make those features with AI 10x faster.
The only products that won’t get replaced are the ones that are extremely complex (Zapier/Gumloop/CopyAI) or the ones that have network effects (Beehiiv/Kit).
Rabbit Holes
4 Perspective Shifts Dr.Kashey Taught Me That Keep Me Going by Alex Hormozi
Model Context Protocol (MCP) Quickstart by Glamma AI
Going global: How and why to hire remotely by Jaryd Hermann and Bill Kerr
What’d ya think of today’s newsletter? Hit ‘reply’ and let me know.
First time? Subscribe.
Follow me on X.
Reply