How Does Slack Make Money?

How Does Slack Make Money? Slack Business Model In A Nutshell

How Does Slack Make Money?

Slack follows a freemium model, where a free version is offered, and users can convert in paying customers if they want more usage or advanced functionalities. Slack combines the free model with a direct sales force to acquire enterprise customers with yearly recurring revenue of over 100K. Those customers were 575 in 2019, and they accounted for 40% of its revenues. 

Slack background story

Stewart Butterfield is a serial entrepreneur, co-founder of the photo-sharing website Flickr. He went through the founding of several companies, in particular, when he founded Glitch (an online game). 

When he was running Tiny Spek, which comprised a set of companies Butterfield and his team needed a communication system to handle the teams within his organizations. That tool was developed in-house, and it eventually became Slack.  

When Slack launched, back in 2013, more and more companies signed up, until its growth kept compounding. Where did this opportunity come from? The timing was right!

As Butterfield said in an interview for CNET: “In the last 15 years, the Microsoft hegemony and Office and Windows worship has broken down, and as a result, we’ve gotten a lot of new and, in most cases, better tools…But that means information is scattered across a bunch of different tools and there’s no one search tool that you can go through to search across all of this.”

From that stage, Slack kept inviting larger and larger groups of companies.

Breaking down Slack vision and mission

Our vision is a world where organizational agility is easy to achieve, regardless of an organization’s size

Therefore, the challenge for Slack is to organize larger and larger groups of people within organizations. Indeed, Slack has been using its enterprise customer base more aggressively in the last years.

Our mission is to make people’s working lives simpler, more pleasant and more productive

The value proposition and mission of Slack starts from its willingness to reduce fragmentation within tools used by organizations. One of the critical elements of Slack is the integrations with other apps and tools, to bring this information together.

Source: Slack Financial Prospectus

How does Slack make money? Slack Freemium subscription model

It generates revenue primarily from paid subscriptions. Those subscriptions are paid either on a monthly or annual basis, the number of users a company has on Slack. Slack offers four subscription plans:

  • Free,
  • Standard,
  • Plus,
  • And Enterprise Grid.

Source: Slack Financial ProspectusThe Free, Standard, and Plus subscription plans consist of a single workspace or a basic Slack environment configured for each team.Slack leverages on a freemium model, that makes it easy for small organizations to try and understand the value of the product.

Once those organizations are “locked-in” Slack offers additional capabilities (unlimited integrations, shared channels, guest accounts) that drive the free users to become paying customers.  The Enterprise Grid package instead, is made for larger organizations with – at times – tens of thousands of users.

As Slack points out in its financial prospectus, this requires a product that has enhanced functionality, flexibility, administrative control, and security at scale.

Enterprise Grid also allows paid customers to:

  • Create and manage an unlimited set of connected workspaces and channels;
  • Search across multiple workspaces, making it easy for workers and administrators to tap into their organization’s collective knowledge at scale;
  • Access centralized controls to ensure a company’s data remains secure, giving administrators a single point of visibility to provision and manage Slack; and
  • Integrate with third-party e-Discovery and data loss prevention tools to help meet security and compliance requirements.

Slack sales and marketing strategy dissected

Slack combines a self-service go-to-market approach to attract non-paying users. At the same time, it uses direct sales efforts to growing the paid users within larger organizations.

Therefore the sales process usually follows this flywheel model:

  • The Slack free version easily attracts a large number of users
  • Self-service users become leads for salespeople
  • Salespeople convert free users in paying customers, usually within larger enterprises
  • These larger enterprises that join in, create organic awareness of Slack inside and outside of their organizations
  • Slack keeps investing in its product, and customer experience
  • It also employs after sales customer success representative, which makes it easy to trigger referral customers

By looking at the company financials Slack has invested substantially in sales and marketing efforts. Indeed, the company spent almost 99% of its revenues in 2017 for Sales and Marketing activities. This number stabilized to 63.5% in 2018 and 58% by 2019.

Источник: https://fourweekmba.com/slack-business-model/

Slack Pricing: How Much Does Slack Cost and How to Pay Less?

How Does Slack Make Money?

With over 10 million daily active users and 85,000 paid customers, Slack is not just the biggest team chat app out there. It is also one of the most successful SaaS businesses in the world.

Although Slack is generally loved, there are a few complaints that we all have about it. Primarily, the price. It’s not the most expensive team chat app out there, but certainly not the cheapest either. Here’s what you get when you search social media for feedback on Slack.

As you’ll find out, Slack can cost a pretty penny. But is that money really well spent?

In this piece, we’ll take a look at the cost of Slack. We’ll show you what you get when you pay for Slack, whether you save any money and whether it’s a good investment at all.

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Before we start, here’s a quick disclaimer: we’re interested in Slack pricing for a specific reason. We are working on a great Slack alternative – Chanty team chat.

It’s not only designed to be more affordable than Slack but also easier to use and more intuitive for the average user. We often look at different team chat apps and analyze what could be done better.

We then take our learnings and apply them to our own app, with one purpose: to make Chanty the best team chat app out there.

By the way, you can try out Chanty right now. For free! Just sign up in the form below.

Let’s talk about money now.

How much is Slack pricing?

Let’s take a look at the table below. This is how much Slack will cost you per user per month when you pay annually.

Free 

$0

Standard 

$6.67

Plus 

$12.50

✓ 10K message search limit

✓ 1-1 video and audio calls 

✓ Up to 10 integrations

✓ Unlimited search and apps

✓ Video calls for up to 15 participants

✓ Guest access

✓ 99.99% guaranteed uptime SLA

✓ SSO 

Besides these prices, you can also choose their Enterprise Grid plan, built for large teams. You can contact their sales team to find out more.

Before going further, there is one thing worth noting. Un many competitors, Slack hasn’t changed its pricing plans for more than 6 years, when the tool officially launched. Take a look at this screenshot from their launch date:

A snippet of Slack’s pricing page in February 2014

As you can also see, Slack had a freemium plan ever since it was launched in 2014. This is also the first plan that we will take a look at today.

Slack’s Freemium plan

While some of its newer competitors Ryver and Flowdock don’t have a freemium plan, Slack has had one since launch.

After all, using Slack without paying sounds great, right? However, no tool could stay in the market while providing access for free. This is why the freemium plan offers some basic features but it has some serious limitations. The most important ones are related to searching your message history, integrating your favorite apps, and making calls.

Let’s take a look at what Slack does NOT give you in its freemium plan.

1. 10K message search limit

Only the last 10,000 messages sent in the freemium plan are searchable in Slack. This means that once you reach 10,000, the oldest messages slowly get deleted and you can’t find them anymore. While 10k may seem a pretty big number, it really is not, and here’s why.

Let’s do some simple math. With 15 people on your team, you’ll write about 3,000 messages every week between each other. This means that it will take you less than a month to run the 10,000 messages you can search for. With a bigger team, you’ll run your 10k messages even more quickly.

This is a major drawback for many teams. Imagine you need to find a link or a file you sent to a coworker just weeks ago. On the freemium plan, you can’t, so Slack forces you into paying $6.67 per user per month (at least) just so you can see your message search history. Not fun.

2. Up to 10 apps and integrations

One of the main reasons why people love Slack so much is the fact that it has so many integrations. At the moment of writing, there are more than 1,500 and new ones are announced daily. Simply put, if an app is any good, there is a Slack integration for it.

However, you can only have 10 apps connected to Slack on the free plan, which you will quickly max out. In most cases, people constantly install and delete integrations to stay within the limit. This is not ideal and of course, you have to pay for the premium version to get unlimited integrations.

3. 1-1 video and audio calls only

If you’re on the freemium plan, forget about having big team conferences and meetings. While Slack does have this feature, you can only use it to talk to one person at a time. Want to talk with two or more people at once? You have to upgrade. If you’re using the mobile app, you can’t make video calls, not even on the paid plan.

Any more drawbacks in the Freemium plan?

Slack does not offer guest accounts on its freemium plan. Moreover, you can’t share any channels with other companies until you pay up. There are also no custom retention policies for messages and files.

Now, let’s take a look at each plan.

Slack Standard plan

Once you make a payment of $6.67 for each of your users (or $8 if you pay monthly), there are no restrictions which we mentioned above. All of your team members get unlimited search history and you can add apps to your heart’s desire. You can make group calls with up to 15 participants, share your screen, add guest accounts, share channels with other companies, and more. 

You also unlock Google authentication and you get priority customer support – although it’s not 24/7. It’s not the full Slack package just yet, but you get a lot of great features. However, what’s the full story? 

Let’s say that you have a medium-sized business with about 80 employees and all of them need to be on Slack. That means you’ll have to pay at least $640 per month. Furthermore, that’s at least $6,500 per year. If you have a bigger team than that, there is no doubt that the annual Slack bill will hit your budget hard.

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Slack Plus and Enterprise Grid plans

Besides the standard plan, there are the Enterprise and Grid plans and they cost even more. 

When you upgrade to the Plus plan, you get some additional features, such as 99.99% guaranteed uptime. This means that Slack will refund you if their servers are down for a particular time period. You also get 24/7 support.

This will cost you $12.50 per user per month when paying annually or $15 per user per month when paying monthly. The Enterprise version comes with unlimited workspaces and shared channels that let you connect workspaces. 

So, can you save any money when using Slack? Let’s find out.

How to pay less for Slack?

There are a few ways to save your pennies when you’re using Slack.

  1. Cut down on the number of users. While some team chat apps charge by the team (e.g. Ryver), Slack charges per user. You can limit the number of your coworkers using Slack so you can pay less. However, this could hinder your team communication.
  2. Pay annually. Just every other SaaS application under the sun, the annual price is cheaper than paying per month.
  3. Sometimes Slack will give you credit to get you hooked into paying for a plan – use this opportunity.

You can also try the trial version of the free plan. 

With all of this being said, Slack may still be expensive for you or you may not be happy with the features it offers. If this is the case, it’s time to look for alternatives.

Looking for a Slack alternative

We’ve covered some of the best Slack alternatives in our article here and showed you the best apps for your team communication. Here is a short table comparing the prices of these top Slack alternatives.

Team collaboration toolPaid plansPrice tag as of March 2019
SlackStandard

Plus

$6.67 per person, per month (annually)

$12.50 per person, per month (annually)

ChantyBusiness$3 per person, per month (annually)
Microsoft TeamsOffice 365 Business Essentials

Office 365 Business Premium

$5.00 per person, per month (annually)

$12.50 per person, per month (annually)

FlockPro

Enterprise

$4.5 per user, per month (annually)

Available upon request

Google ChatBasic

Business

Enterprise

$5 per user, per month

$10 per user, per month

$25 per user, per month

As you can see from the table, there are a few options which are more affordable than Slack. Some of them are even better than Slack in terms of features.

One of these tools is Chanty.

“50 Surefire Ways to Improve Your
Team Communication”

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How does Slack compare to Chanty?

These two apps have one thing in common. They’re not just communication tools – they’re also collaboration tools with a host of features. They also have freemium plans and similar features such as audio and video calls.

However, Chanty is better than Slack in several ways. 

  1. Chanty is easy to use since it’s an agile tool. Slack has a lot to offer but it can get complicated to use. On the other hand, Chanty is very intuitive to use. In the Teambook, you can find all of your files, links, and conversations.
  2. Chanty is more affordable. The Business plan costs half of the cheapest Slack plan. You can learn more about Chanty pricing here.
  3. Chanty has no limits for your message search history, no matter which plans you are on. Freemium? Doesn’t matter, you can see all of your messages.
  4. Chanty has a built-in task management feature, un Slack. In Chanty, you can turn messages into tasks, assign them to your team members, discuss them, and set deadlines.
  5. Chanty allows you to send audio messages by hitting the record button on your phone, which is ideal for everyone not working from an office. That way, you can get your message across quickly, without typing.

Even though Chanty is a newcomer compared to Slack, there are lots of reviews from happy customers and we can confidently say that it’s a worthy Slack alternative.

If you want to learn more, book a demo today and we’ll show you how your business could benefit from Chanty!

Wrapping up

Taking a close look at Slack pricing, we can see that the freemium plan has some serious limitations. The biggest ones are the 10,000 message history limit and the fact that for bigger teams, Slack can cost a fortune.

There are ways to reduce the amount you pay for Slack, but none of them are really effective. However, there are lots of Slack alternatives on the market that you can consider if you want to pay less.

How do you feel about Slack pricing? Let us know in the comments!

This post was originally published in April 2019, updated in August 2020.

Источник: https://www.chanty.com/blog/slack-pricing/

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