How Slack has successfully implemented their Initial Pricing Change
This month, Slack launched its first pricing change after the launch of the business in the year 2014. Slack announced its pricing change on an article on its blog posting in July, and price changes went into effective in September.
In this piece we look at some of the methods Slack used to introduce its updated pricing.
1. Justify With an Increase in Value
Slack started its announcement with a description of how they've enhanced the benefits of their service. This immediately appeals to people's sense of fairness: Slack does not just increase its price due to inflation or an increase in expenses.
2. Make The Price Increase (And your Pricing In General) Easy to Estimate
The messaging application utilizes a pricing model based on seat, making it easy for users to estimate quickly how the cost increase will affect their spend. Slack has increased the price of their service to $.75 per user/month for Pro plan members who pay monthly as well as $.58 per month for each user to annual Pro plan users. If you know the number of seats you're paying for, you can easily calculate it.
Slack made use of the opportunity to streamline the free service by eliminating the limit of 10,000 messages as well as five GB storage limits for free plans, and restricting full access up to 90 days.
Kurt theorized that their original guidelines made it difficult teams in determining when they would hit the threshold. "Now I'm thinking 'Okay, got it. There's a 90-day window for me to save that historical record. At this point, I'll need to upgrade to the pay plan."
Kurt said that simplifying their pricing model allows them to not just understand pricing, but also sell it "When you price based on things that people think like"I'm going to have to open an Excel calculator to figure out within $100,000 how much that cost?' That's not great. That slows down the conversation."
3. Keep an eye on your global Users
Slack posted price increases for the month of April in US dollars but included an option to quickly see the price increases in other currencies.
If you are dealing with customers that use different currencies than the default currency, ensure that you inform them of price changes in these currencies so that they have an easier time making the calculation.
4. Incentivize Customers to be loyal
Slack provided an extension of their existing rate for customers that renewed early for another year. The company even offered the incentive of switching from a monthly to an annual subscription.