Spotify Technology SA (NYSE:SPOT) will introduce a higher-priced premium plan later this year, charging users at least $5 more monthly for better audio and new playlist tools.

Spotify's stock is trading higher on Tuesday.

The plan will be an add-on for existing customers, generating additional revenue for the company, Bloomberg reports.

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The new tier, dubbed "Supremium," will vary in price based on the user's base plan but will average a 40% markup, Bloomberg notes.

Among the benefits for upgraded subscribers is access to high-fidelity audio, a feature Spotify announced in February 2021 but delayed. Competitors like Amazon.Com Inc (NASDAQ:AMZN) Amazon Music, and Apple Inc (NASDAQ:AAPL) Apple Music now offer higher-quality audio as part of their standard plans.

The new subscription tier follows recent price hikes, with the standard paid tier in the U.S. increasing to $11.99 monthly. This premium plan could significantly boost Spotify's revenue, which is shared with music rights holders.

Subscribers will also get custom playlists generated based on their behavior.

Last week, the company hiked prices for its premium plans in the U.S. to boost its margins.

In April, Spotify reported a quarterly gross margin growth of 243 bps to 27.6%, reflecting improved podcast and music profitability. Premium subscribers improved by 14% to 239 million.

Spotify stock gained over 105% in the last 12 months. Investors can gain exposure to the stock via iShares Russell Midcap Growth ETF (NYSE:IWP) and iShares Russell 1000 Growth ETF (NYSE:IWF).

Price Action: At the last check Tuesday, SPOT shares were trading higher by 1.13% at $312.50.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Cezar Sampaio on Unsplash