Canva Shows AI Doesn’t Come Cheap

AI might make life easier (this point is debatable, but now isn’t the time), but it’s also making everything more expensive.

This week, users of Canva — a buzzy design software startup seen as the cheap alternative to Adobe — were dismayed to open their inboxes and find that their subscriptions were going up. Not just going up, but rocketing by as much as 300%, per reporting from The Verge. In a statement to The Verge, Canva’s communications lead said the price increase reflects an enhanced suite of products that the company has woven into its subscriptions. The majority of those new products? AI tools.

Spared No Expense

When a company announces a price hike, its explanation for doing so often isn’t the full story, of course. Canva is reportedly readying itself for an IPO, so there could be an element of fattening up the company’s financials.

However, generative AI tools are also expensive to develop and maintain, and while all kinds of companies have pitched into feathering AI throughout their business operations, not that many seem to have cracked the profitability nut yet. And Canva has released a lot of tools:

• In October 2023, Canva released a suite of AI tools called Magic Studio. The tools let users automatically convert their content into different formats, translate it into other languages, and generate both images and video.
• According to emails sent to Canva users in the US, subscriptions are going up from $120 a year to $500, although it is offering a discounted first year for $300. A discount that’s still a 150% increase — that’s a real design trick.

Open the Coffers: Even the most popular AI tools aren’t necessarily mastering the money-making side of things. On Tuesday, The New York Times published a temperature check on everyone’s favorite AI startup-slash-giant OpenAI; one source inside the company told the NYT that it’s now generating around $2 billion in annual revenue. OpenAI is a private company, so its financials are not so open, but an analysis by The Information in July found its expenditures could reach around $7 billion for the year, resulting in a $5 billion loss.