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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