How Slack successfully rolled out their first Pricing Change

Oct 10, 2022

The month of September was when Slack launched its first pricing change after the launch of the business in the year 2014. Slack made the announcement of its price change in the form of a blog posting in July, and the changes to pricing took effective in September.

In this piece we look at the various strategies Slack used to launch its latest pricing.

1. Simplyify a Rise in Value

Slack started its announcement by explaining how they've increased the value of its platform. The announcement immediately appeals to users' sense of fairness: Slack does not just increase its price because of inflation or an increase in costs.

2. Create the Price Increase (And Your Pricing in General) Simple to Calculate

The messaging application utilizes a pricing model based on seat that allows users to quickly estimate how the cost increase will affect their spend. Slack has increased the price of their service to $.75 per user per month for monthly Pro plan members as well as $.58 per user per month to annual Pro plan users. If you are aware of the amount of seats you're paying for, it's easy to quickly do the math.

Slack used this opportunity to simplify its free plan by removing the limit of 10,000 messages as well as 5 GB of storage limit on its free plans. It also limited the access period for 90 days.

Kurt theorized that their original rules made it hard for teams to guess what time they'd hit the threshold. "Now, I'm thinking "Okay, that's it. I've got 90 days for me to save this past. That's about the point where I'll have to upgrade to the paid plan."

Kurt said that simplifying their pricing model allows them to not only understand pricing but also sell the concept "When you price based on something where people are like, 'I'm going to need to open an Excel calculator to calculate the exact amount that it will costs?' that's not great. That slows down the conversation."

3. Keep an eye on your global Users

Slack made public price changes for the month of April in US dollars. However, they also provided an option to quickly see the price increases in other currencies.

If you have customers who utilize different currencies to the default currency, ensure you communicate price adjustments in the respective currencies, so they can have a simpler time making the calculation.

4. Incentivize Customers to be loyal

Slack has offered to increase their current rates for customers that renewed early to a new year. The company even offered an incentive to switch from a monthly to an annual subscription.