How Slack Successfully Rolled Out Their First Pricing Change

EJ Brown
EJ Brown
October 10th, 2022
Estimated read time: 2 minutes, 42 seconds

In September, Slack rolled out its first pricing change since the company launched in 2014. Slack announced its pricing change in a blog post in July, and pricing changes took effect in September.

During a recent live interview about pricing strategies to combat stagflation, FastSpring’s Sales Manager Todd Stellfox and Chief Product Officer Kurt Smith discussed what Slack did well in this announcement.

In this piece, we break down some of the strategies Slack employed to successfully roll out its new pricing.

1. Justify With an Increase in Value

Slack started its announcement by explaining how they’ve increased the value of its platform. This immediately appeals to people’s sense of fairness: Slack isn’t just raising the price because of inflation or an increase in costs. 

2. Make The Increase (And Your Pricing in General) Easy to Estimate

The messaging app uses a seat-based pricing structure, making it easy for users to quickly estimate how the cost increase will affect their spend. Slack raised their price $.75 per user per month for monthly Pro plan members and $.58 per user per month for annual Pro plan members. If you know the number of seats you’re paying for, you can quickly do the math.

Slack used this opportunity to further simplify its free plan by removing the 10,000 messages and 5 GB of storage limit on free plans and limiting full access to 90 days. 

Kurt theorized that their original policies made it confusing for teams to guess when they would hit the limit. “Now, I’m thinking, ‘Okay, got it. I’ve got 90 days if I need to retain that history. That’s about the point where I’ll need to upgrade to the paid plan.”

Kurt explained how simplifying their pricing model makes it easier to not only understand pricing but also sell it: “When you price based on something where people are like, ‘I’m going to need to pull up an Excel calculator to figure out within $100,000 how much that cost?’ That’s not great. That slows down the conversation.”

3. Be Mindful of Your Global Users

Slack announced pricing changes in US dollars but included a link to easily see the price increases in other currencies.

If you have customers who use different currencies than your default, make sure you announce pricing changes in these currencies so that they have an easier time calculating the cost.

Note: FastSpring makes it easy to localize your pricing. Automatically localize your self-serve checkout or send localized quotes.

4. Incentivize Customer Loyalty

Slack offered to extend their existing rate for customers that renewed early for another year. They even fit in an incentive to switch from a monthly to an annual plan.

The way you talk about pricing to new prospects and customers used to an old price will be different. Finding a way to reward customer retention can be valuable. “That’s a very critical thing,” Kurt explained. “When you think about rolling out pricing changes and increases, make sure you draw a line down the paper and think: what am I doing for new customers that I bring on from this point forward? And what do I do for historical customers?”

Note: Our Interactive Quotes tool simplifies pricing conversations with prospects. Try it out for free.

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