Cloudflare hikes prices by a quarter, blames the accountants
Cash flow is king, even in the cloud
Cloudflare has announced what it claims are its first ever price rises.
As of January 15, 2023, new customers for the company's Pro Plan will be charged $25 a month, up from $20. New signups for the Business Plan will be charged $250 each month, up from $200.
Current customers won't cop the extra charges until May 14, 2023. Folks who sign up between now and January 15 also get the delayed price rises.
Cloudflare has also introduced annual plans that save a few bucks across a year if you pay up front for twelve months of service. The Pro plan costs $240 and the Business Plan $2,400 – the same as today's monthly prices.
The internet-grooming company has explained the changes as a cashflow consideration.
"We need to invest up front in building out our network, and the main reason we're making this change is to more closely map our business with the timing of our underlying costs," states the post in which CEO Matthew Prince and president Michelle Zatlyn announced the changes.
The post points out that since its 2010 debut Cloudflare has gone from five datacenters on three continents to points of presence in 275 cities, and has added myriad services.
Continuing to do so needs more cash at different times.
"One of the challenges we have is managing the cash flow to fund those investments as quickly as we'd like," argued Prince and Zatlyn. "We invest up front in building out our network or developing a new feature, but then only get paid monthly by our customers. That, inherently, is a governor on our pace of innovation. We can invest even faster – hire more engineers, deploy more servers – if those customers who know they're going to use us for the next year pay for us up front.”
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That stance is not unusual: hyperscale clouds try to have customers pay up front for one to three years. Microsoft encourages annual payments for its 365-branded suites.
"We have no shortage of things we know customers want us to build, so by collecting revenue earlier we know we can unlock even faster innovation," Prince and Zatlyn wrote. "In other words, we are making this change hoping most of you won't pay us anything more than you did before."
Cloudflare's accountants doubtless hope that getting a year's worth of cash up front also means the company doesn't have to fiddle with short-term financing. Or indeed much financing at all, given interest rates are rising fast around the world and lenders are leery of tight economic conditions.
Prince and Zatlyn's post closes with the authors expressing "hope you'll opt to switch to our annual billing."
Will you? Hit the comments, dear reader, and let us know. ®