How Slack has successfully implemented their First Pricing Change -
The month of September was when Slack rolled out its first price change since it was founded in the year 2014. Slack revealed its new pricing in an article on its blog article in July. The the changes to pricing took effective in September.
In this post we look at the various strategies Slack used to roll out its new pricing.
1. To justify an increase in Value
Slack announced its plans by describing how it has increased the benefits of their service. This immediately appeals to people's perception of fairness. Slack does not just increase its price due to the rise in inflation or costs.
2. Help Make the Price Increase (And the Pricing of Your Services in general) Simple to Calculate
The messaging application uses a seat-based pricing structure which allows users to quickly estimate what the price increase can impact their spending. Slack raised their price $.75 per user per month for monthly Pro plan members as well as $.58 per user per month for members of the annual Pro plan. If you have the exact number of seats you're paying for, you can quickly do the math.
Slack used this opportunity to streamline its free plan by removing the 10,000 messages and 5 GB of storage limit on free plans and limiting full access to 90 days.
Kurt theorized that their original rules made it hard teams in determining what time they'd hit the threshold. "Now, I'm thinking "Okay, I got it. There's a 90-day window if I need to retain that history. This is about when I'll require an upgrade to the pay plan."
Kurt explained how the simple pricing system makes it easier to not just understand pricing, but also to sell it "When pricing is based upon the perception of people that say, 'I'm going to need to access an Excel calculator to calculate what it would costs?' that's not a good idea. It slows the discussion down."
3. Keep an eye on your global Users
Slack made public price changes in US dollars. However, they also provided a link to easily see prices in different currencies.
If you are dealing with customers that have different currencies from the default currency, ensure you communicate price adjustments in the respective currencies, so they are able to make a better decision when making the calculation.
4. Incentivize Customers to be loyal
Slack has offered to increase their existing rate for customers that renewed early for another year. The company even offered an incentive to switch from a month-to-month to an annual subscription.