It’s been a good run. Business consumers of software have enjoyed stable or even falling prices amid an explosion in productivity and choice. Plentiful capital, intense competition, and a strong pace of innovation over two decades deterred tech providers from raising their prices as they focused on the holy grail of market share.
Microsoft, for example, added hundreds of enhancements to Office 365 over the past decade and only raised prices this March.
But as the price of everything from gas to food staples to furniture gallops ahead at its fastest pace in more than 40 years, businesses need to prepare for an unfamiliar era of tech inflation. Higher interest rates will likely pull capital away from buzzy tech startups and toward bonds and other safer assets, resulting in less competition among existing players. That, combined with red-hot wage pressure in the sector and higher business expenses, means it’s only a matter of time before technology product companies start to jack up their prices.
