Canva Learns a Tough Lesson on Pricing

I am a long time Canva user, more than 10 years and it is an important part of my business. I use it to make graphics, workbooks, presentations, product labels, and more. It is one of my favorite tools and I appreciate the affordability. But that may change as Canva recently decided to raise its prices by 400% – and regretted its decision.

This was a bad move but it’s typical of what happens when a small player becomes a big deal in business – they forget their market demographics. Canva has since rolled back its price increases after facing backlash from its more than 170 million users. What lessons did Canva learn? Let’s talk about pricing and why you should not betray your customers by raising your prices.

How many of you use Canva? I do and it is an essential component of my business. Canva and I have a great relationship, and I have become a very proficient Canva user since early 2015, when I first discovered it and joined its community. I quickly started paying for my account because I believe in paying for software and services that I use in my business, even when there is a free option. I have worked in the tech industry for many years and I know how much time, effort, and money it takes to run the back end systems.

When I started with Canva, the user fee was $12.95 a month, a bargain. I then graduated to an annual subscription for $119.95, still a bargain.

I just renewed my professional Canva subscription last month for the same price, $119.95, which I consider to be a bargain. Even after 10 years my membership cost is less than the cost of high end design software that I don’t want to have to spend years learning. Canva offers a significantly less technically and financially painful alternative.

I had no idea that Canva was raising its annual pricing for the professional account holders until I read about it a few days ago.  Raising its prices is an understatement. Canva was quadrupling the cost of the annual membership from $119.95 to $500.

 I quickly checked my billing to make sure that I had not paid that much for my recent renewal and I had not so I am not sure when they were going to implement this change for its long time users, who should be grandfathered in to any price increase.  Especially people like me, who have been loyal, paying customers for more than 10 years.

Of course Canva received considerable backlash from its customer base about this ill-conceived price increase and rightly so. It is a sign of how out of touch Canva has gotten with its user base. That happens when a startup becomes a major industry player, going from no revenues to over $2.5 billion in annual revenues with more than 170 million active monthly users. A few months ago Canva ran a promotion that showcased its image count and celebrated one billion images. Those are very impressive numbers.

So with that many satisfied, active users why would Canva do something that was so unfair to its users? There are several possibilities that I will discuss here but overall, it is a sign that Canva is now a large corporation that has forgotten its user base demographics and in the ever changing tech world that is a grave mistake.

Would these people quit Canva if they raised their prices that much? I would, even though it would be a huge inconvenience as I have thousands of images and graphics that are important to my business. But any competitor would find a way to import images into its database, in the same way that you can import your mailing list if you decide to change email service providers.

Why would Canva do this to their customers? Let’s look at a few options:

1. They want to increase revenues and ultimately profits as they are allegedly preparing for an IPO. That makes sense in the short term but not in the longer term.  They may show additional profits for an SEC filing but after their IPO many customers will leave either because they can’t afford the service or they are just mad and feel betrayed.

2. They believe that they are a unique and singular provider and can risk upsetting their user base because there is no direct competitor in the market. Their users may be angry with them for raising prices by 400% but they will ultimately stay and keep using their services as a matter of convenience. That is a huge misconception because one thing that is certain in the software as a service industry is the rise of copycats and competition. Someone, very soon, is going to introduce a Canva alternative which will include an import feature and Canva is toast. They will go from first line to benched in an internet minute.

3. They want to get rid of their casual user base of small, independent business owners and focus more on the higher end corporate market. Another strategic error because the higher end market uses professional designers and they do not use Canva exclusively, as does the majority of Canva’s market.

4. They believe that their plethora of new features, including AI, makes their product more valuable and customers should see that value and be willing to pay more. I disagree. I have been with Canva for 10 years and I have watched its evolution. In the earlier years new features were introduced slowly, with great fanfare, and they were useful.

Everything was fine until they introduced their new AI and other features, then everything started breaking. In the first release of their recent new features and ’improvements’ someone forgot to reinstall the search bar at the top of the screen.  I noticed it was gone and reported it, I am sure several million other people did too.  How were we supposed to find our projects or search among Canva’s more than 1 million templates without the search bar that we have known, loved, and used for so long? Does anyone test these changes before they are released into production? It does not appear that they do.

The new features slowed down performance and their new layout was not accompanied by release notes so it was hard to find anything. As a former technical writer and systems analyst, I know that this is de rigeur for companies today and it’s annoying and very frustrating. If you are going to make changes to your services you should tell customers about the changes, not surprise them, especially when introducing multiple changes or changing the entire home screen.

As an aside, zoom did this a few months ago when they changed the entire layout of their features menus. Unfortunately, they buried one of their most used features, the screen share, in several sub menus, moving it from its prominent place on the lower task bar where it could easily be seen, along with decreasing the font size.  The share screen option  was impossible to find. The first time I was on a call in which I had to use the screen share feature, I had to end the call because I could not find the option.

They must have had a lot of complaints because the share screen feature is now highlighted with a bright green box. But they also did something that doesn’t make sense – once you share the screen the button moves to the task bar instead of staying fixed where you originally chose it. Do these people ever talk to their customers about the changes they are making and does anyone other than the developers test them? I do not think so and I speak as an authority on software testing and implementation.

Back to Canva, which has seriously insulted its user base with this unfair and unwarranted price increase. The company has its ‘eyes bigger than its stomach’ as my grandma would say, and is going after bigger fish but has lost sight of the needs and demographics of its user base. Canva will never compete with Adobe or Corel, the systems that professional designers use. Those are well established products that are expensive to buy and take years to master. Plus they have a committed user base that is technically far beyond Canva’s reach.

Canva’s market base is users like me, single owner home based businesses that need an alternative to hiring a professional designer because they simply do not have the budget or the ongoing need for one. It is so easy to create beautiful graphics and other design assets with Canva and that is how it has marketed itself from the outset, to small and micro businesses.

 Canva needs to return to (or remember) its roots and to stop taking on airs, trying to capture market share with companies that it is not in the same league with

Meanwhile Canva has rolled back its price increase in the face of very strong protest as it should have. But it should never have quadrupled the price to begin with. The person who had that idea should be fired, along with those who approved it.

Now Canva has hired a new c-level executive from Zoom. Given zoom’s recent product upgrade gaffes, which I just mentioned, that is probably not a good thing. We’ll see what happens.

I suggest that Canva delay any price increases until the furor dies down and they offer alternatives for their user base so that small business owners who need the inexpensive and yet professional looking designs that Canva is known for can continue to be long time customers, like me.

I am a huge Canva fan, an experienced long time user who encourages others to use Canva. In fact, Canva could probably make a lot of money by introducing an affiliate program. I know that I have created at least 1000 new Canva users from my Canva training class and business training programs. I do not get paid for this. I do it because Canva is such a great resource for small business owners on a limited budget and it’s easy to learn to use – at least it was until Canva decided to go AI and make its systems really complicated.

And this should be a lesson to all companies like Canva which cater to the small business market. I am unpleasantly surprised at how many of them are happy to happily take money from to the volume of users they attract by serving this vast user group and yet they want to price like their corporate counterparts. That is a huge error in judgment. Small businesses do not have vast or unlimited budgets, most are barely breaking even so their financial resources are limited. They notice price increases and guess what, contrary to the opinions of a lot of business ‘experts’ who are not experts in business at all, price is a deciding factor. Price is the point and it will always be the point with this demographic.

While Canva has huge network and data storage requirements, software as a service saves them millions of dollars. For those, like me, who have been in the tech world for more than 3 decades, there was a time when software was mailed to you on one or more CDs (or even on diskettes) and any upgrades required additional mailings. The advent of SAAS was a huge money saver for software providers because they no longer had to produce and mail out CDs every time there was an upgrade.

And the online user base has grown considerably in the past 30 years but the corporate mindset has not. Companies like Canva forget their roots and think that just because they have a captive audience they can charge whatever they want. Price is the point and customers, especially small business customers, make decisions on price. I know I do. I won’t buy things I can’t afford or I do not think are in my budget no matter how much I am told about their ‘value,’ a highly overrated and overused, worthless concept.

What should Canva do? They should stop the price increases and find other ways to boost their bottom line. Offer a higher priced corporate tier without penalizing their loyal small customer base. It takes a lot of effort to anger 170 million people but Canva, and whoever made the misguided decision to 4x their prices, did it. And they heard from those people too. We are more connected than ever to our suppliers just as they are connected to us.

If Canva wanted to raise prices it could have found a more equitable, cooperative way to do it. And I hope they learned an important lesson because customer loyalty is something that is hard to regain once it is lost and in the vast interconnected community of the internet, bad news travels fast and reputations can be destroyed in minutes.

Canva is a great product and I am an enthusiastic fan but even I have my limits and I will seek other alternatives if Canva decides to go the big bad bully route and raise its prices just because it thinks it is holding me hostage with my thousands of graphics that I have created over the years. I will take my .png and .pdf files and go find another provider, one who understands and respects the needs of the small business market and is happy to treat small business owners as valued and valuable customers and not cash flow or revenue commodities.

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