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Sticker shock. With inflation at its most, well, inflationary in four decades, the US Bureau of Labor Statistics estimates the Consumer Price Index stood at 9.1% higher in June 2022 than the year prior. Hopefully that situation is temporary, but with the situation similar in the UK and throughout the Eurozone, it might not come as a surprise to learn that some enterprise providers are planning on raising prices.
Enter Oracle. The software giant is reportedly planning on raising prices for support by around 8% in the US, as well as other regions where inflation remains high, the Register reported on Monday.
According to the Register, Craig Guarente, the founder and CEO of software licensing consultory Palisade Compliance, first heard news of the price increase from clients. The news was further confirmed to the site by Scott Jensen, an Oracle practice lead at Anglepoint.
Jensen told the Register that in a revision of the Oracle Software Technical Support Policies dated July 8, 2022, Oracle established the groundwork for price increases. In a section on support pricing in the event a client terminates some software licenses, the revised policies state prices for remaining licenses will be maintained at or below preexisting prices “plus any applicable country annual adjustments.” Jensen added that he had yet to see any increased prices in contracts. Guarente echoed that Oracle has inserted inflation language into its terms and conditions—and told the Register that it will likely be “seizing [the] opportunity” of high inflation to press clients to buy new services in exchange for concessions on support pricing.
Oracle didn’t respond to the Register’s request for comment.
Not just Big Red. Intel, TSMC, and other major chipmakers have also announced price increases for computer components they say are necessary due to inflation. Other vendors are allegedly raising prices, sometimes by the double digits. More broadly, inflationary pressures may signal a transition from the era of tech investors demanding growth at all costs to a more subdued focus on earning returns on spending. According to Barron’s, companies that enjoy pricing power are best positioned to do well amid inflationary pressures.
Sanjay Brahmawar, the CEO of Software AG, told Fortune that most businesses will only be able to pass on a portion of increased costs to customers and will have to “go back into [their] efficiencies and look for more gains.” B2B companies may fare better than B2C, thanks to the long-term nature of B2B contracts, he added.
“We don’t have these subscriptions where every month you can just cancel; it’s a three-year contract,” Brahwamar told Fortune. “So it’s sticky business, which means customers don’t just step away like they can in a B2C environment.”—TM
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