Morgan Stanley: Salesforce Pricing Shift Could Add $1B in Revenue

• Salesforce (CRM) shares declined 1.24% to $259.09 after announcing a 6% average price increase for Enterprise and Unlimited Editions of Sales Cloud, Service Cloud, Field Service, and select Industries Clouds, effective August 1, alongside Slack Business+ plan price hikes from $12.50 to $15 (annual) and $15 to $18 (monthly) per user.
• Morgan Stanley’s (MS) Keith Weiss projects the pricing changes could add $1 billion in incremental revenue over two years, driving double-digit topline growth, while maintaining an ‘Overweight’ rating and $404 price target on Salesforce.
• The selective price adjustments, sparing Foundations, Starter, and Pro editions, reflect Salesforce’s focus on leveraging AI-driven innovation and premium offerings to strengthen its position in the competitive enterprise software market.

Salesforce (CRM) shares dipped 1.24% to $259.09 during midday trading on Wednesday, despite touching an intraday high of $265.08. The movement follows the company’s announcement of updated pricing for its Enterprise and Unlimited Editions across Sales Cloud, Service Cloud, Field Service, and select Industries Clouds, effective August 1. The price hike, averaging 6%, aligns with Salesforce’s strategic push to capitalize on the growing demand for AI-driven enterprise solutions, as the company competes in a rapidly evolving AI landscape. Additionally, Salesforce adjusted pricing for its Slack Business+ plan, raising the per-user monthly cost from $12.50 to $15 for annual billing and from $15 to $18 for monthly billing, reflecting enhancements in the platform’s capabilities.

The pricing adjustments are part of Salesforce’s broader efforts to sustain revenue growth amid intensifying competition in the enterprise software and AI sectors. Morgan Stanley (MS) analyst Keith Weiss noted that while the fiscal Q3 launch of the new pricing is unlikely to prompt changes to Salesforce’s FY26 Subscription Revenue guidance, the increase could generate approximately $1 billion in incremental revenue over the next two years. This potential upside is expected to accelerate topline growth back into double-digit territory, reinforcing the firm’s confidence in Salesforce’s long-term trajectory. Weiss maintained an ‘Overweight’ rating on the stock with a $404 price target, signaling optimism about the company’s ability to leverage its robust product portfolio.

Salesforce’s decision to raise prices selectively, sparing its Foundations, Starter, and Pro editions, underscores a targeted approach to maximizing value from its premium offerings. The company emphasized in an online statement that the changes reflect “significant ongoing innovation and customer value” delivered through its products. This sentiment is particularly relevant as Salesforce continues to integrate AI capabilities, such as those powering its Einstein platform, into its cloud-based solutions to enhance automation and predictive analytics for customers. The Slack pricing adjustment further highlights Salesforce’s focus on extracting greater value from its collaboration tools, which have become integral to hybrid work environments since the company’s $27.7 billion acquisition of Slack in 2021.

The enterprise software market remains highly competitive, with players like Microsoft (MSFT), Oracle (ORCL), and emerging AI-focused firms vying for market share. Salesforce’s ability to maintain pricing power while delivering innovative AI-driven features will be critical to sustaining its growth momentum. The company’s cloud platforms, which serve a wide range of industries from healthcare to financial services, are well-positioned to benefit from the increasing adoption of digital transformation initiatives globally. However, investor reactions, as evidenced by Wednesday’s stock decline, suggest a cautious outlook on the near-term impact of the pricing changes, particularly as macroeconomic uncertainties linger.

Salesforce’s strategic pricing moves come at a time when the broader SaaS industry is grappling with balancing growth and profitability. The company’s focus on AI innovation, coupled with its expansive ecosystem of cloud-based solutions, positions it to capture a significant share of the projected $1.7 trillion global enterprise software market by 2030, according to industry estimates. While the immediate market response to the pricing announcement has been tepid, the projected $1 billion revenue uplift over two years signals a pathway to sustained growth, provided Salesforce continues to execute on its innovation roadmap and maintain customer loyalty in a competitive landscape.

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