How Slack has successfully implemented their first Pricing Change
In September, Slack rolled out its first price change since the company launched in 2014. Slack made the announcement of its price change in an article on its blog posting in July, and price changes went into effect on September.
In this post, we break down the various strategies Slack employed to successfully launch its latest pricing.
1. Simplyify a Rise in Value
Slack announced its plans with a description of how they've enhanced the value of its platform. It immediately appeals to the public's belief in fairness. Slack isn't just raising the price due to the rise in inflation or costs.
2. Create the increase (And the Pricing of Your Services in general) Simple to Calculate
The messaging app uses a seat-based pricing structure that allows users to quickly estimate how much the increase in cost will affect their spend. Slack has increased the price of their service to $.75 per user/month for monthly Pro plan members as well as $.58 per month per user for annual Pro plan members. If you have the exact number of seats that you're paying for, you can easily calculate it.
Slack used this opportunity to further simplify its free plans by taking away the limit of 10,000 messages as well as 5GB of storage on its free plans. It also limited full access up 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, I got it. I've got 90 days for me to save that history. That's about the point where I'll need to upgrade to a pay plan."
Kurt described how simplifying the pricing process makes it easier to not just understand pricing, but also sell the concept "When you price based on the perception of people that say"I'm going to have to access the Excel calculator to calculate the exact amount that it will is going to cost me?' It's not ideal. It slows the discussion down."
3. Be Mindful of Your Global Users
Slack made public price changes in US dollars but included the option of easily observing the price hikes in other currencies.
If you have customers who have different currencies from your default, make sure that you inform them of price changes in the respective currencies, so they are able to make a better decision when making the calculation.
4. Incentivize Customer Loyalty
Slack has offered to increase their current rates for clients who renewed earlier to the end of the year for a further year. They even fit in the incentive of switching from a monthly to an annual plan.