Teaching free customers to use Clips and Huddles is a strategic decision to deepen free engagement in Slack. As remote and hybrid work took off during the pandemic, Slack (now a Salesforce company) made a strategic decision to compete for more workplace communication mindshare.Īccording to Slack’s 2021 annual report, Slack stated, “On a typical workday… Paid Customers averaged more than ten hours connected to Slack through at least one device and spent more than 110 minutes actively using Slack.” Putting aside feelings about “too much Slack,” that’s mind blowing 🤯.īy shifting Clips and Huddles into its free plan, Slack will encourage free customers - about 80% of Slack’s total customers - to use audio and video alongside its text and channel-based communication. Giving More Features to Free Customers: Over the last few years, Slack released Huddles and Clips to give its paid customers better video and audio work communication tools within the platform. Increasing prices on new Pro customers while offering a discount for legacy customers who upgrade to annual contracts. Changing its core feature limit to a clear and predictable monetization moment for target customers.ģ.
Giving ~80% of its customers more value for free to deepen engagement in the product.Ģ. While per-seat pricing is still common today, the movement toward usage-based models has taken off among SaaS companies thanks to Slack’s success. In other words, Slack’s pricing model forced it to prove its value through adoption. After all, Slack was competing for adoption alongside traditional email and work messaging tools, but this monetization model accelerated adoption by reducing customer apprehension to pay for another work communication tool. Slack’s usage-based pricing model was a disruptive and novel idea when it was first announced, and helped the company quickly scale. Through this policy, Slack’s customers are only charged for actively used seats in the product, and unused seats are refunded, unlike traditional per-seat models that charge regardless of use. Slack’s pricing model is relatively well-known among SaaS nerds (🙋) because it was an early pioneer of active seat pricing through its Fair Billing Policy. Below, we analyze the changes alongside Slack’s last 10K and annual report prior to its acquisition, and we dig into the implications for SaaS companies looking to follow in Slack’s footsteps.
Last month, Slack announced it’s first price increase since launching in 2014, but the price increase is just the beginning of the story.
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