How Slack has successfully implemented their first Pricing Change
In September, Slack introduced its very first pricing changes after the launch of the business in the year 2014. Slack made the announcement of its price change via an article on its blog article in July, and price changes went into effect in September.
In this post, we break down the various strategies Slack used to launch its latest pricing.
1. To justify an increase in Value
Slack started its announcement with a description of how they've enhanced the worth of their platform. It immediately appeals to the public's belief in fairness. Slack doesn't simply increase the cost due to inflation or an increase in cost.
2. Create the Price Increase (And the Pricing of Your Services in general) Simple to Calculate
The app for messaging utilizes a pricing model based on seat, making it easy for users to quickly estimate what the price increase will affect their spend. Slack raised their price $.75 per user/month to monthly Pro plan users and $.58 per month for each user for members of the annual Pro plan. If you have the exact number of seats you're paying for, you can quickly calculate the cost.
Slack took advantage of this to streamline its free plans by taking away the 10,000 messages and five GB storage limits on free plans and limiting the access period for 90 days.
Kurt theorized that their original guidelines made it difficult teams in determining what time they'd hit the limit. "Now, I'm thinking 'Okay, got it. I've got 90 days if I need to retain the historical record. This is about when I'll require an upgrade to the premium plan."
Kurt described how simplifying their pricing model helps customers not only comprehend pricing but also sell the concept "When you set prices based on something where people are like, 'I'm going to need to pull up an Excel calculator to figure out what it would costs?' that's not a good idea. It slows the discussion down."
3. Take note of your worldwide Users
Slack made public price changes in US dollars, but also included an option to quickly see the price hikes in other currencies.
If you are dealing with customers that utilize different currencies to your default, make sure that you inform them of price changes in these currencies so that they have an easier time calculating the cost.
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. They even fit in incentives to change from a month-to-month to an annual subscription.