How Slack Successfully Rolled Out Their first Pricing Change
This month, Slack rolled out its first pricing change after the launch of the business in 2014. Slack made the announcement of its price change in a blog posting in July. The the changes to pricing took effective in September.
In this post, we break down the various strategies Slack employed to successfully launch its latest pricing.
1. Justify With an Increase in Value
Slack announced its plans by explaining how they've increased the value of its platform. It immediately appeals to the public's belief in fairness. Slack does not just increase its price because of rising inflation or expenses.
2. Make The Increase (And the Pricing of Your Services in general) Easy to Estimate
The messaging app uses a seat-based pricing structure, making it easy for users to estimate quickly how the cost increase can impact their spending. Slack increased their cost $.75 per user per 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 amount of seats you're paying for, it's easy to quickly do the math.
Slack took advantage of this to simplify its free plans by taking away the 10,000 messages and five GB storage limits on free plans and limiting all access for 90 days.
Kurt theorized that their original guidelines made it difficult for teams to guess what time they'd hit the threshold. "Now I'm thinking 'Okay, got it. I've got 90 days if I need to retain the history. At this point, I'll have to upgrade to a paid plan."
Kurt described how the simple pricing system helps customers not just understand pricing, but also to sell the concept "When you set prices based on something where people are like"Do I need to pull up the Excel calculator to determine the exact amount that it will is going to cost me?' It's not great. That slows down the conversation."
3. Take note of your worldwide Users
Slack posted price increases that were in US dollars but included the option of easily observing the price hikes in other currencies.
If you are dealing with customers that have different currencies from your standard, be sure you announce pricing changes in the respective currencies, so they have an easier time in calculating the price.
4. Incentivize Customers to be loyal
Slack provided an extension of the current rate to customers that renewed early to the end of the year for a further year. Slack even included the incentive of switching from a monthly to an annual subscription.