In order to increase the profitability of the products, Salesforce would look at Oracle’s licensing model with interest. What that means for customers remains to be seen.

CEO Marc Benioff promised shareholders that going forward, Salesforce will make profitability its top priority. Benioff was partially forced to say that. Shareholders Starboard Value and Elliot Management are pressuring management to sell Tableau and Slack, among others. Salesforce has enjoyed almost nothing but prosperity since its inception in 1999, but is now facing economic realities and has laid off 10 percent of its workforce.

This new focus on making a profit should also have an impact on customers. Benioff’s plan begins to take shape. The Register writes that Salesforce wants to follow Oracle’s playbook. Oracle works with licenses for its cloud and database services. This licensing model consists of multiple tiers, where the price is calculated based on multiple parameters, including the number of users and the number of CPUs.

hunting oracles?

Not surprisingly, Benioff is looking towards Oracle. Benioff worked for Oracle for thirteen years and considers Larry Ellison his mentor and personal friend. Ellison reportedly advised his former Poulain on how Salesforce could implement a similar model.

What this means for the prices of Salesforce products is not yet known. But Oracle typically achieves high margins thanks to its licensing model, and that’s what Salesforce is striving for. Although the CRM specialist has good sales figures in 2022, up 18 percent compared to 2021, margins remain well below Oracle’s forty percent at 22 percent. Benioff wants that share to grow to 27 percent by 2024, and that goal needs to be met one way or another.

Oracle’s licensing model is controversial despite the high margins it brings in for the company. Customers don’t always understand how their monthly price is calculated and find that Oracle makes it difficult for them to keep costs down. Oracle also sometimes dares to change the rules, often resulting in price increases. The current prices from Salesforce are then much more transparent and clear for customers.