After attending SaaStr annual two weeks back , I returned to NYC with two big takeaways.
- More and more companies are moving the outbound process to marketing.
- Slack set a new precedent for the “seat” model that will completely disrupt the current model… and lead to more sales.
The first point is a trend that many of us have seen in the last year but with companies like Zenefits proving this model at scale I’m sure you will see more organizations start at this point. Giving marketing the ability to control the complete top of funnel just makes sense as we shift toward the fully quota’d marketing organization.
The Slack pricing model and payment terms, though, is something that turned many heads, including a brief look of shock from the host Jason Lemkin when Slack CEO Stewart Butterfield first explained.
The standard pricing set by Salesforce and many others years ago was the fixed, pay for seat model. You commit annually to a number of seats and are forced to make tradeoffs as to who should and shouldn’t be on the system. The Salesforce sales and customer success teams then try to grow and upsell. This is a multi-year process to get large adoption throughout a company that is extremely time, people, and resource heavy. This has been the recipe for the last 10+ years and it worked!
BUT WHAT SUCKS ABOUT THE OLD MODEL?
- It makes people think about who should and shouldn’t have a seat.
- Department leaders have to guess who will and won’t use in advance so even if you buy 100 seats in year one, you still have to guess on year two and will normally just add seats in 1s and 5s as needed
- As stated above, the upsell process is long and it’s extremely difficult to get 100% account penetration
- This process creates many touch and friction points between the client and company.
Slack is where team communication happens. When your team needs to kick off a project, hire a new employee, deploy some code, review a sales contract, finalize next year's budget, measure an A/B test, plan your next office opening, and more, Slack has you covered. Slack itself, with its 200 channels on its internal Slack, would reach that limit in about three hours. So we upgraded to the Standard plan because it totally made sense. And when you make that leap, you don't upgrade from $0 to $20 per month. Slack Pricing Overview. Slack pricing starts at $8.00 per feature, per month. There is a free version. Slack offers a free trial. See additional pricing details below.
What’s the Slack fix?
Commit to seats but only pay for active users.
I commit to ten but only five people actually use…I pay for five.
WHY IS THE SLACK MODEL BRILLIANT?
- It puts usage on products shoulders rather than sales. Product is incentivized to make things simple and drive usage because if the customer doesn’t use Slack, they don’t make money.
- It encourages department and company wide adoption from day one, or at least Month 1, as it spreads rapidly to other departments. There are no tradeoffs needed and the pitch is simple: If your people love it and use it, you pay. If not, you don’t.
- It delights and amazes people when a company sends an email saying they refunded you X dollars because X% of people didn’t use.
Additionally, this leads to larger MRR much earlier in the client relationship which short circuits the upsell and penetration process by years.
Obviously I’m a fan and believe this will be a go to strategy for many companies in the (very) near future, especially for those brave enough to stop selling and trust the product to do the work. Time will tell if this blows up or becomes the norm, but either way it is refreshing to see someone pricing in a new innovative way.
October 24, 2019
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Slack took over modern office communications partly because it's free to start. Any team can sign up for Slack and use all of its core features for free. That's how it slowly got adopted in companies from the bottom up, as smaller teams joined Slack, then got their wider division to start using it, and suddenly it was the way everyone talked at work.
Slack's free plan is generous—and nearly a fourth of the teams who shared their Slack pricing with Capiche still use Slack's free plan. As long as your team doesn't have more than 10,000 messages, or doesn't need to view older messages, you're free to use Slack for free as long as you want.
But once you need to pay, what should your team expect to pay? The average team pays around $9.71 per user per month for Slack—though depending on your team's needs, you could pay a third less.
Here's what we've learned from over sixty teams who shared their Slack pricing:
For most teams, Slack's default prices work out best. The best way to save is to use a Slack annual plan, which charges you upfront for the year but gives a ~17% discount.
But it doesn't hurt to ask. If you have more unique circumstances, or are using Slack in a large company, you may be able to negotiate from 30-60% off, based on what others have shared:
“We are a large financial company. Our initial quote was $12/user/month, and we got them to drop it to $6.50/user/month.”
“Unable to negotiate a discount, but we were able to be 'reimbursed' (with credit) for bot users that used 'real' accounts.”
“Our company with a little less than 3000 people were quoted $1 million dollars per year (~$27 per person per month). We used their free plan until they were going IPO, where they needed the sale, then lowered it to $10 per person per month.”
“We have negotiated a deal of 60% off on our total pricing on Slack.”
“We are a team of 10 engineers. We explained our story of zero profit and no funding. They provided a discount of 30% off pricing.”
If Slack's paid plans still don't fit your budget, these teams shared ways they’ve saved on Slack:
Invite freelancers as guests: “We work a lot with freelancers and couldn't justify the price to have them join so we decided to create larger channels with channel guests or multi channel guests.”
Stick with the free plan: “Having over 50 people was never enough to get a discount, so we are forbidding storing important information in Slack messages and then using the free version.”
Slack includes free, Standard, Plus, and Enterprise plans—but turns out, there are also other plans available for the asking if you have unique needs:
“On Business Plus, $208.70 per user (850 Users, annual plan). It's an unadvertised tier between business and enterprise that gives some additional features, including the eDiscovery API for compliance.”
“Enterprise Select level license, $240 per seat, 80 seats. Not a well known or advertised service level, specifically designed for regulated firms without major IT staff.”
What can you expect to pay for Slack’s standard plans—and is the annual discount worth it? These team’s real pricing help show what your team can expect:
“$26k/yr for Slack for ~150 users. Only discount was paying annually in advance, nothing on the basis of volume of seats.”
“We're paying $1120/year for 14 active users. It's a lot but we definitely rely on Slack. This is the one SaaS app that I feel like we're getting true value out of.”
“We are paying $0 for 4 users. We are still in the free tier, which is great.”
“We pay $115 a month for 8 users.”
“220 employees, paying £63 yearly per user. We initially were paying monthly, but annual pricing was more efficient.”
“Our team of around 25 pays $8/month per user.”
“$31,295.64 for a year contract with 390 users with a year contract.”
“For the 'Standard Plan' - $1,404.80 total annual ($1,280 for 16 users and $124.80 sales tax). The plan fluctuates monthly when people are added or removed. It does a good job of automatically doing this.”
“We pay $247.73/month for 29 users, totaling about $7k/year.”
Slack Costs
“Our team of around 350 is paying $12.50/user/month on their Plus plan (list price). We've looked into Enterprise but they haven't made it easy or quick to get a quote.”
Slack Cost Per Person
“Our team of 25 people pays $200/month for the standard plan. You can save more if you go with an annual contract however we have stuck to the monthly plan at this time. However, some months we have more active users than other months, causing this price to fluctuate.”
“We pay for 8 users a total of $693.76 annually. We are on the Standard plan and are billed annually.”
“$400/yr for 5 active users, didn't negotiate. We get billed immediately when we add new users to the team, paying retail pricing on those.”
“Team of couple of dozens, we're using it for free.”
“We have had great success at setting up 'SlackOps' with Slack's Standard $6.67 per person, per month plan with our 52 person team.”
“34 people for 2550€ per year for the standard license”
“$6.67 per user per month. It's Slack, we would be useless without it.”
Click here to share this article: The average team pays around $9.71 per user per month for @Slackhq.
Have other questions about Slack? Ask Capiche's software experts community at capiche.com/slack/ask. Or check out over 100 other products' pricing at capiche.com/products.
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