Prices Go Up (Discount Goes Down)
News Flash: Salesforce announces 9% price hike. Nonprofit prices rise 14.6%.
I've been trying to get confirmation of why there is a higher price increase on nonprofits than for for-profits, with no success yet.
Here's my best guess of how it came about:
The Public Announcement
On July 11th, Salesforce announced that it was going to raise its license prices by 9%. Though it made news, there wasn't a whole lot of discussion or consternation within the Salesforce community. Prices hadn't gone up in years, so maybe it didn't seem that unreasonable? I don't really know why there didn't seem to be more pushback. Maybe in the wake of Salesforce's layoffs earlier in the year a price increase didn't seem nearly as significant...
The prior list price for a Sales Cloud license was $1,800 per year. When the price increase went into effect, those licenses rose to $1,980.
Note: If you work for a for-profit business: you should not pay list price for licenses either. Ask for a discount!
No Mention of Nonprofit Prices
At the time of the news announcement, I didn't see any public communication about pricing for nonprofits. Most of us assumed their pricing would go up by the same percentage. We were much more focused on questions like whether the P10 donation would apply to the New Nonprofit Cloud, how much additional Nonprofit Cloud licenses would cost, and the like.
Before the price increase, nonprofits purchasing their 11th and future licenses paid $432/year. If you do the math, that comes to exactly a 76% discount for nonprofits paying for licenses after the P10 grant.
How Much Is the Nonprofit Discount, Anyway?
Math aside, Salesforce has never actually committed to a percentage discount in nonprofit pricing. I have, in fact, argued strongly for years asking for Salesforce to give a clear number for the percent discount that nonprofits can expect on any given Salesforce SKU. I've asked for it in both public discussions and in private conversations because I believe that pricing transparency would be helpful for nonprofits.
I've never gotten a clear answer on why Salesforce can't just give us a discount percentage. It seems to be tied up with their difficulty in providing clear and transparent pricing in general. Yes, prices are finally available on the website, but it was quite a struggle to get to that point. Before that was printed, the for-profit list prices were much easier to find than anything about what nonprofits would pay. That is exactly why I felt I had to create and maintain the Crowdsourced Salesforce.org Pricing Sheet. (Now that more is public the sheet may not be necessary, but I still think it's far more convenient than having to hunt around different parts of Salesforce's sprawling website.)
Before creating that sheet (and after it went live) I asked repeatedly for a statement to the effect of, "Nonprofits can expect that most Salesforce products will be discounted 76% or more from list prices." I couldn't get Salesforce.org to commit in public to such a rubric and I do not know why they refuse.
The clearest reason I ever got was that it risked understating the discounts that were available on some products. But that seems a paltry excuse to me. Nobody is going to complain when some things are even cheaper than that rubric would imply. And it would not be hard to follow up a blanket statement with details indicating that some products might be excluded and others discounted even further. As long as you say "at least X%," you have plenty of room to discount further! I even offered to help edit a statement to ensure it would be clear and unambiguous. Salesforce.org would not budge.
My Best Guess: No Guideline Lead to a Higher Percentage Increase
I think the lack of a clear statement about the discount is what lead to .Org raising prices more for nonprofits than Salesforce raised them for everyone else.
Though it was obvious on the crowdsourced pricing sheet (and from the math) that the discount came to 76% on licenses, it was not officially a "76% discount." Rather, there is no discount percentage, there is just a different price book for Salesforce.org than for Salesforce.com. The prices are not technically tied together. It was coincidence that a Sales Cloud license was 76% lower than list price and a Platform Starter License was also 76% lower than list price. As a matter of policy, there is simply a "regular list price" and a "Salesforce.org price," each published independently.
Of course, people don't think that way, particularly when you look around and see that licenses of one type are discounted the same percentage as licenses of another type. You quickly come to a shorthand. I'm speculating here, but I guess that people within Salesforce.org had a shorthand number of 75% in their heads. (I'm pretty focused on the prices but I don't think I would come up with 76% at a moment's notice. I would have said 75% and then tried to remember to check before giving imprecise information.)
So when the list price rose by 9% and it was time to publish new prices for Salesforce.org, someone probably took the new list price ($1,980), reduced it by 75% with a quick tap on their calculator app, and then advocated for the new prices, when published, to reflect that math: $495.
Oops, That's Much Higher!
Here's the problem: The prior price was $432. The new price is $495.
$495/$432 = 1.145833333333333
Licenses are 14.6% higher than before!
It hasn't hit most organizations yet, but those that pay for licenses will get bills 14.6% higher than last year. 💸
You can already see this if you go into the Your Account app and look at adding an additional license. They're now $41.25/month. They used to be $36/month.
Actually, this means that if you add licenses mid year you will already pay the new price, pro-rated for the remaining contract length. You just won't pay the higher price on your existing license count until your renewal date.
Sorry to be the bearer of bad news.