Investing.com -- Raymond James analyst Adam Tindle published an industry brief Tuesday flagging early evidence that ServiceNow Inc (NYSE: NOW) is implementing price increases that could exceed the company's own guidance, arguing the dynamic could simultaneously accelerate near-term revenue and deliver durable, high-margin growth that the broader market has yet to fully appreciate.

At its May analyst day, ServiceNow disclosed an expected 20-30% pricing uplift as customers transition from legacy tiers to three new tiers, Foundation, Advanced, and Prime, with AI and agentic functionality embedded directly in the package. Raymond James says its own customer and industry checks suggest actual increases are arriving above even those levels. "We are beginning to see early data points via customer/industry checks around ServiceNow flexing its muscles on price increases that could 1) accelerate near-term growth via early renewal activity, and 2) drive more durable longer-term growth than investors currently appreciate as these are meaningful increases," Tindle wrote.

The timing may be urgent for customers still on legacy contracts. Raymond James has seen indications that June 30 may represent the last date to purchase legacy tiers, with those offerings set to be retired over the next 12 to 18 months. That sunset deadline could push customers into early renewals, pulling forward revenue the market currently models in later periods.

What makes the pricing story particularly compelling to Tindle is the margin profile. Because these price increases flow through an existing customer base, they carry essentially no Customer Acquisition Cost. "We have heard this from a small cohort of plugged-in NOW investors, but don't think it is broadly understood and are attempting to get in front of the message as this could drive high-contribution margin growth as there is essentially no CAC (Customer Acquisition Cost) with these incremental dollars," he wrote. Raymond James frames this as an information asymmetry play: the investment thesis is visible to only a narrow set of investors, suggesting a re-rating opportunity as the pricing trend becomes more apparent in reported financials.

Beyond the tier transition, Raymond James also details ServiceNow's published Now Assist rate card, which prices potential overage charges at $0.20 per Assist, the unit measuring actions taken by Now Assist skills. Agentic workflow consumption scales with complexity: small workflows with fewer than four actions consume 25 Assists, medium workflows of five to eight actions consume 50, and large workflows spanning nine to 20 actions consume 150. Assist entitlements are negotiated per contract, aggregated at the account level, last 12 months, and customers pay the same per-action rate regardless of which underlying model or LLM infrastructure ServiceNow uses to execute the task.

Raymond James also highlights a structural wrinkle for customers considering alternatives. Core ITIL functionality such as change management and incident response could require upgrades to a more expensive tier under the new structure, adding switching pressure for organizations that might otherwise resist the price increase. Tindle draws an explicit parallel to Broadcom's handling of VMware, noting that "the core platform is deeply embedded (tough to lift/shift, reminds us of Broadcom's strategy with VMware)." With few viable alternatives, Raymond James views churn risk as limited even as it acknowledges the aggressive pricing could become a new bear case for the stock. "This may also create a new bear case around potential for customer churn, though we note very few viable alternatives and the core platform is deeply embedded," Tindle wrote.

Raymond James maintains a Market Outperform rating and $130 price target on ServiceNow. The firm is watching for evidence of whether Now Assist entitlement consumption is aligning with customer return on investment as adoption scales. "While we haven't heard of Assist proliferation occurring yet, we are watching for evidence of Assist entitlements and (mis)alignment with ROI," Tindle noted.

The June 30 legacy-tier deadline is the nearest catalyst. If customers accelerate renewals ahead of that date, the effect should become visible in ServiceNow's next reported bookings figures, providing an early test of whether Raymond James's pricing thesis translates into the top-line acceleration Tindle is projecting.