Spotify announced this week it is raising prices for its US premium subscription plans. The individual plan will increase to $12.99 from $11.99 per month. The duo plan rises to $18.99 from $16.99, and the family plan goes to $21.99 from $19.99. Student plans are also increasing to $6.99 from $5.99.
With these changes, Spotify becomes the most expensive major music streaming platform compared to Apple Music and Amazon Music.
Evercore ISI tech analyst Mark Mahaney analyzed the potential financial impact. He estimated the price increases could boost sales by 4% to 5%. Assuming the same gross margin profile, Mahaney calculated an approximate $270 million increase in gross profit, with most flowing to operating income.
Mahaney based his calculations on an estimated 65 million US subscribers. He assumed roughly 45% are on individual plans and 44% are on duo or family plans.
In total, Mahaney projected incremental revenue of 842 million euros, or about $978 million, from the price increases over three quarters of fiscal year 2026.
"We continue to view Spotify as the global leader in streaming audio with accelerating monetization, strong user growth, and improving profitability," Mahaney said. "Average revenue per user expansion is underway, supported by price increases across 150+ markets and steady retention, confirming Spotify’s pricing power and low churn. We expect the full uplift to layer in through early 2026 alongside the forthcoming rollout of a higher priced Superfan/Premium+ tier."
Mahaney rated Spotify at Outperform with a $750 price target, representing 47% upside from current levels. This target is above the $730 average among Wall Street analysts. Of the 41 sell-side analysts covering Spotify, 75% rate the stock a Buy or Strong Buy.
Spotify last raised US subscription prices in June 2024. That followed an increase in July 2023, which was the company's first price hike since its US debut in 2011.
After previous announced price increases, Spotify shares initially traded sideways or slightly down as investors worried about subscriber retention. The stock later settled and experienced strong bullish runs as the financial benefits of higher prices became apparent and users remained.