Spotify launched its premium plan in 2009 for $9.99/mo and thirteen years later in 2022 they had 205 million premium subscribers at that same price, but had never turned a profit.

Then, over the course of 18 months in 2023 and 2024 they took two price increases, taking their standard premium plan from $9.99 to $11.99. And in the process, they went from losing €500 million in 2023 to making €1.1 billion in 2024.

Not only did they not lose customers, but they continued to increase their number of premium customers despite the price increases.

In this episode, I look at Spotify’s pricing history, the way in which they went from following Apple’s pricing to being a pricing leader in their category, and I examine how much of their move to profitability came from price changes versus cost cutting.

More broadly, I look at the power of low dollar pricing, and the way that on a small ticket item it’s sometimes possible to take a large percentage increase which customers barely notice.

Thanks for reading PricingEvolution! This post is public so feel free to share it.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.pricing-evolution.com