How Does Slack Make Money? [Brief Overview]

Screenshot of Slack Homepage
Courtesy of slack.com

 

Slack Overview

Slack is primarily a business communication platform that provides features such as real-time messaging, archiving, and searching through threads of topics and projects for teams. The software’s popularity is based on its ability to centralize work inside of one unique platform by connecting all the most used tools with apps and integrations.

According to company CEO Stewart Butterfield’s statement in an interview for africa.businessinsider.com, “Slack” is the acronym for “Searchable Log of All Conversation and Knowledge”.

Slack serves leading organizations in every industry around the world, from the fastest-growing startups to Fortune 500 companies, such as Starbucks, Target, and TD Ameritrade, along with leading academic institutions, non-profits, and governments in more than 150 countries.

How Does Slack Make Money?

Stock Photo from Pixabay
Courtesy of pixabay.com

Many users of Slack express curiosity on the topic of its monetization, and the query ‘How Does Slack Make Money’ gets a large number of searches online.

The basics of how Slack makes money are covered in detail below.

 

Slack Business Model Overview 

Slack’s monetization relies on a “freemium” model, meaning that the software itself is free but that the platform offers access to more advanced features and functionally through subscription plans offered on an annual and monthly basis. 

In 2019, an article published on inc.com explained that although the company had a total of over 600,000 clients around the globe, it only made money from a small portion of them. 

Here is how the article detailed the breakdown:

“Slack posted more than $400 million in revenue last year, up 82 percent from $220.5 million the year before. Only 15 percent of its customers paid for the service. Of those paying customers, 575 clients paid more than $100,000 each for their Slack subscriptions. That means less than 0.1 percent of Slack’s total customer base accounted for 40 percent of the company’s revenue, according to its offering prospectus.”

The company reported a total revenue of $234.5 million in its third fiscal quarter ended October 31, 2020. The Chief Executive Officer and Co-Founder at Slack- Stewart Butterfield- stated the following regarding the positive results:

“We had a phenomenal quarter, headlined by continued acceleration in new paid customer growth, with 12,000 net paid customer additions, up 140% from the same quarter last year.”

In the same report, the Chief Financial Officer at Slack- Allen Shim- mentioned that the company “…ended the quarter with 1,080 customers spending more than $100,000 annually, up 32% year-on-year.” 

 

Slack Pricing Plans

Screenshot of Slack Subscription Plans
Courtesy of slack.com

 

Slack offers four different subscription levels, giving users a large amount of flexibility and convenience. Plans start from the ‘Free’ Slack basic subscription plan and go up to the ‘Enterprise Grid’ plan, which comes with a large scale collaboration feature, able to accommodate up to 500,000 users.

The breakdown of the four Slack subscription plans is as follows:

  • The “Free” plan, which- as the name states- comes at no cost but offers limited functionality.
  • “Standard”, which costs $6.67 a month if billed annually or $8 if billed monthly. 
  • “Plus”, which costs $12.50 a month if billed annually or $15 if billed monthly. 
  • “Enterprise Grid”, which is a custom package for extra large businesses or those in regulated industries

To compare and learn more about the features included in each Slack plan, visit this page.

 

Company Info

Based in San Francisco, Slack Technologies, Inc. was founded in 2009, by Stewart Butterfield, Eric Costello, Cal Henderson, and Serguei Mourachov. 

As per the description on the company’s LinkedIn page:

“Slack has transformed business communication. It’s the leading channel-based messaging platform, used by millions to align their teams, unify their systems, and drive their businesses forward. Only Slack offers a secure, enterprise-grade environment that can scale with the largest companies in the world. It is a new layer of the business technology stack where people can work together more effectively, connect all their other software tools and services, and find the information they need to do their best work. Slack is where work happens.”

On July 15th, 2020, Slack expanded its  “Next Chapter” program- designed to shift perceptions about the potential of people who have been incarcerated and generate new opportunities in skilled, long-term employment- to include Dropbox and Zoom

A press release, dated 1st of December 2020, reported that the company entered into a definitive agreement to be acquired by Salesforce.com, Inc. Here is an excerpt from the press release that mentions the amount of funds involved: 

“Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020.”

The Chair and CEO of Salesforce, Marc Benioff, talked about this acquisition as a unifying force: 

“This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world.”

 

Slack Contact Info

You may reach Slack via the following social media pages:

 

Conclusion

All of the above is a basic run-down of how Slack makes money. To learn more about Slack, you can visit their official website or check out their blog for more information on the software and its online communities.

 

 

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