Pricing Overview

Slack has mainly been used as a communication platform for people within the same organization, as well as a way to connect with others outside of the organization. Slack values customer partnerships and often times looks to help companies grow over the course of the relationship. The pricing structure is dependent on the number of licenses and what level of service the organization decides to move forward with.  Slack offers three paid pricing plans; Pro, Business+ & Enterprise Grid. We have also seen Slack offer “Enterprise Select'' as a bridge between Business+ & Enterprise Grid but have seen it offered less and less. They also have an AI add-on available. See breakdown below:

Pricing model comparison:

• Pro: This SKU is normally too limited for many organizations because of the lack of user provisioning & SAML. This pricing is $7.25/user/month and is not typically discounted given it is the lowest tiered plan type.
• Business+: This tier covers many SMB and Mid-Market organizations with its user provisioning, SAML and data exports.  This pricing is $12.5/user/month.
• Enterprise Select: This tier is not advertised but still available as of 5/31/24. It includes access to the discovery API and audit log API. This pricing is $20/user/month.
• Enterprise Grid: Organizations that lean toward Enterprise Grid require HIPAA compliance, backup, and domain claiming.  This pricing is $32/user/month.
• Slack AI: A simple, secure, and intuitive AI that works directly in Slack.  This is priced at $10/user/month.

General Strategy

1. Leverage Growth and Contract Term

• Emphasize Growth: Highlight any current or projected user growth to negotiate better terms. Be conservative in your growth projections to maintain leverage throughout the negotiation.
• Opt for Multi-Year Contracts: Secure a multi-year agreement to mitigate annual uplift fees and lock in better rates. This approach often leads to more substantial discounts and price stability. Multi-year deals lock in the discounts and avoid the 9% Year over Year uplift Slack applies.
• Utilize End of Month or Quarter Timing: Accelerate negotiations to align with Slack's fiscal deadlines (end of month or quarter) to capitalize on their urgency to close deals, which can lead to better discounts. EOQs are January, April, July, and October.

2. Strategic Use of Contract Features

• Annual vs. Quarterly True-Ups: Push for annual true-ups instead of quarterly to manage costs more effectively and avoid frequent renegotiations. Slack will push customers to quarterly true -ups, but it is recommended to hold firm on annual.  Annual true-ups offer free growth throughout the term until you true-up at the next renewal.
• Price Caps and Lock-Ins: Negotiate for price caps between 3%-5% within the contract to protect against unexpected price increases, especially when committing to multi-year terms.
• User License Management: Regularly review and adjust the number of licenses based on actual usage to ensure you are not overpaying services not being utilized.

3. Negotiation Tactics and Relationship Management

• Build a Relationship with Your Slack Rep: Engage with your Slack representative to explore creative solutions that meet your budgetary needs. A strong relationship can lead to more flexibility during negotiations.
• Customer Escalation and Strategic Partnerships: Use customer escalation strategically to gain last-minute concessions and emphasize the importance of your account to Slack, especially when discussions are stalling.
• Highlight Historical and Future Commitments: Use past commitments and future potential as leverage, demonstrating the value of your continued partnership to Slack.

4. Prepare for Uplifts and Price Adjustments

• Anticipate Standard Uplifts: Prepare for an annual uplift fee (9%) and discuss this upfront. Use it as a negotiation point to either reduce the fee or offset it with other benefits.
• Secure Discounts for Additional Users: If agreeing to add more users, negotiate to remove or reduce the uplift fee, leveraging the increased user base as a commitment to Slack’s growth.
• Be Aware of Slack’s Pricing Changes: Stay informed about Slack’s pricing strategy, especially any shifts due to its full integration into Salesforce, to anticipate changes and adapt your negotiation strategy accordingly.

Custom Strategies

Strategy #1: For current customers considering Enterprise Grid upgrade

• Step One: Understand usage and send notice of non-auto renewal at minimum 45 days ahead of renewal via email.
  • Internally, decide how many licenses are used and how many will be needed in the future.
  • Ask Slack to share the usage data they have and review the data to ensure it aligns with internal data.
  • Notice of non auto - renew: “We would like to send an official notice of non auto renewal per our contract while we work through options for the upcoming renewal. Please confirm this is sufficient notice to avoid the auto renewal of this agreement.”
• Step Two: Gather Pricing.
  • Ask for renew as-is pricing on the current plan and ask for a comparison with Enterprise Grid pricing as some folks are lobbying for it.
  • After receiving the above, ask for Enterprise Select pricing with the same quantities. This will confirm the availability of their Select offering.
• Step Three: Request reduced volume proposals
  • After receiving the pricing, ask for Enterprise Select & Grid pricing with reduced quantities. This will “scare” the reps as they will not want to lose additional business. You may let them know the current pricing is unacceptable and the team needs to re-evaluate their options.
• Step Four: Push on pricing.
  • Slack is open to reducing the Enterprise Select & Grid  license cost when volume and/or term length are leveraged.
    • Multiyear agreement: avoids Slack’s 9% annual uplift and typically can push for higher discounts with small growth commitments.

Strategy #2: For current customers with plans to increase headcount

• Follow steps one and two from Strategy #1 (inserting your current tier if not Enterprise)
• Step Three: Leverage “Growth” and willingness to commit to higher license count.
  • Let the reps know that the team is considering a user increase, but will only able to get this approved by finance if they meet the allotted budget.  
• Step Four: Add Uncertainty.
  • Underestimate the user requirements in order to gain additional leverage.  Be conservative as growth throughout the term will be free usage if you maintain the annual true-up schedule.
  • Ask for a proposal with 70%-80% of total needs. This way, we can get a clear baseline price and then push for more discounting once needs increase again.
• Step Five: Customer Escalation & Timing.
  • Have an executive on the team send a note to the Slack rep that reiterates the budget asked for and willingness to commit to the increase, if the price is right.
  • This is where the team may leverage timing and offer a target signature date in return for Slack bringing forth their best and final offer.

Strategy #3: For current customers with plans to reduce headcount

• Follow steps one and two from Strategy #1 (inserting your current tier if not Enterprise)
• Step Three: Right-size as much as possible.
  • Choose a conservative, yet realistic number of users.
  • Threaten a further reduction or tier downgrade if the pricing isn’t satisfactory after the reduction.
  • Relay that the downsizing is a direct result of budgetary constraints and anchor low on the budget.
• Step: Multi-Year.
  • Slack removes the annual 9% uplift for 2+ year contracts.
  • See where Slack moves the needle on pricing for a multi-year and request that pricing to be honored on a 12 month term if you are not comfortable committing long term.

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