Spotify increased prices for its premium plans in the United States on Monday, as part of its ongoing effort to enhance profit margins. The Swedish music-streaming service raised the cost of its individual plan to $11.99 from $10.99 per month, the duo plan to $16.99 from $14.99, and the family plan to $19.99 from $16.99 in its largest revenue market.
In recent months, Spotify has aimed to improve its margins by reducing marketing expenditures and implementing layoffs, shifting from relying on promotions and significant investments for user growth. The company, which competes with services from Apple and Amazon.com, saw its shares rise over 4% in morning trading.
“We’re increasing the price of Premium Individual so that we can continue to invest in and innovate on our product offerings and features,” Spotify stated in an email, which will be sent to U.S. subscribers over the next month.
Spotify’s revenue in the United States grew nearly 11% to 5.23 billion euros ($5.69 billion) in 2023, according to its annual report. The company provides an ad-supported free service with limited features and a subscription-based paid service offering full functionality, with premium subscribers contributing the majority of its revenue.
Analysts believe the streaming giant could drive further growth by offering customized subscription plans based on consumer preferences in areas such as music, audiobooks, and podcasts. The company’s quarterly gross profit exceeded 1 billion euros ($1.09 billion) for the first time in April, following a reduction in marketing spending.
