Canva has announced that its Canva Teams product will jump in price by a whopping 300%.
👉 Background: Canva is the Australian-founded design software that started in Perth as a year-book building platform, and has now grown to over 170 million active users worldwide.
👉 What happened: After many adjustments to its product over the past few years, Canva has announced that its Canva Teams product will jump in price by a whopping 300%. It claims that the big spike is because of its growing suite of AI products.
👉 What else: But, the internet has blown up with people threatening to defect to Adobe. So, these pricing changes will really test Canva’s price elasticity.
💡Price elasticity of demand is a concept that measures how sensitive buyers are to changes in price.
💡In other words, when a product is elastic, a small increase in price can lead to a significant drop in demand, like airline tickets. On the other hand, inelastic products see little change in demand despite price hikes... like petrol. For example, If the price of petrol increases by 50%, we don't see 50% less purchases.
💡So it will be interesting to see if Canva’s users perceive the new generative AI tools as essential…which could see demand remain stable even with higher prices. Or they may see a major defection to Adobe.
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