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canva: playing a free hand?
Let's jump back to 2025. You're Melanie Perkins, CEO of Canva - Australia's most valuable tech company.
You have 250 million users, but only 30 million pay and the rest use your software for free.
One group you’re worried about is professional designers. They still don’t use Canva much after years of habit using Adobe suite. Plus, they think about Canva the way a chef thinks about an air fryer.
To address the gap, you bought a UK design software company called Affinity that designers love, for $580 million.
Affinity's business model was a simple once-off fee of $260. By comparison, Adobe charges over $100 a month for comparable essential design tools. No wonder designers liked Affinity.
Your plan is to use the Affinity acquisition to bring designers over to Canva. How are you going to do it?
This week's Strategy Standoff:
Do you a) charge for it, or do you b) give it away for free?
the strategy standoff
Strategy A: Licence to Bill
You could make Affinity the heart of a paid Canva professional tier at around $35 a month.
This would be much cheaper than Adobe, and earn you a return from your purchase of Affinity. This would also lift your revenue per user right at the time you’re dressing Canva up for a stock exchange float.
However, you’d be fighting Adobe on its own ground: subscription against subscription, and they are a very big beast to take on.
Strategy B: Undercut and Paste
You could make Affinity free with a Canva account.
That would give designers exactly what they want because that’s huge value when all they have to do is open a Canva account.
However, you’d be using a massive asset purchase as a marketing tool and you’d recruit the users less likely to be happy paying you a Canva subscription, because the reason they chose Affinity in the
first place was to avoid the hated Adobe subscriptions bills.
so, which did they choose?
Cast your vote to find out!
better luck next time, strategy b was chosen!
good job, strategy b was chosen!
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But how did this work out for Canva...
outcome: facilitator commentary
Matt Braithwaite-Young
Managing Partner
t +61 2 9002 3100
Cutting Adobe Down to Size
In October 2025, Canva relaunched Affinity as a professional design app free to everyone, forever. All a designer had to do was open their first, free Canva account.
What an aggressive move! Giving Affinity away gave designers a bridge across to Canva, and a whopping 1 million designers crossed it in a week!
Canva was clear about where they thought the return would come from. The free part was the software. The paid part would come later, for using AI features like Remove Background and Generative Fill, all sitting behind a Canva Premium subscription.
Co-founder Cameron Adams said: "When more pros use Affinity, more teams end up using Canva."
When Free Got Expensive
Six months later, Canva shipped AI 2.0. and described the change as going from a design platform with AI to an AI platform with design.
However, demand for AI use ran far ahead of forecast which meant massive AI "compute" bills started rolling in fast. Canva had to hit the brakes to stop accelerating AI charges sinking their profits.
They admitted they had been "relying too heavily on frontier models", with big price tags that were unsustainable for their subscription levels (let alone free users).
Between the $500M Affinity purchase and runaway AI costs, their revenue was still up 25.2% but short of Canva's own guidance.
Then in August 2026, early backers Blackbird and Airtree marked Canva down 17%, from US$42 billion to US$34.9 billion. They concluded the 220-odd million non-paying users were only ever affordable in a world without AI (where a free user cost nothing), while every user who upgraded was now chewing
through expensive AI tokens like Tic Tacs.
Re-designing Design
Canva has now added an AI Pass to solve this variable cost nightmare. For US$100 a month on top of a Pro or Business plan, the AI pass covers Canva online and also inside Affinity.
But that cost is now approaching the cost of Adobe's whole suite. So the people who crossed the bridge to Canva might not be that happy.
AI Meddling With Industry
Was making Affinity free the right call? I think so. Software that costs nothing to serve is the cheapest marketing you will ever buy, and a million designers in a week is ground Adobe will find it hard take back.
What Canva got wrong was not factoring in the AI costs - their model was still priced as if AI cost as little to run as software. That is fixable, but whether they fix it before the shareholders' patience runs out, we should know by 2027.
How to Avoid Designing Yourself into a Corner
Every leadership team has big assumptions, and they’re often unspoken. For example, like Canva, you may think compute will stay cheap. Or perhaps you think interest rates will stay low. Or your distributor will help you sell in your product.
A scenario planning workshop is built to find and test the assumptions that underpin your strategic choices.
You put your team in front of a range of futures, work out which of your assumptions are important, and identify any "no regrets" options, the moves that pay off whichever way the future unfolds.
It takes a day and is considerably cheaper than the millions an oversight might cost you. If you’re interested in Scenario Planning we are doing a "how to run your own workshop" webinar on 22 September and you can learn more about that here.
Or call our office on +61 2 9002 3100
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