How Does Slack Make Money?

Slack is a messaging platform that is part email and part text/IM, and it has been adopted by hundreds of thousands of businesses and teams. Slack offers a free plan, so many people may be wondering, “How does Slack make money?”

In this article, you’ll learn more about how Slack works, how it makes money, and how to decide if Slack is a good choice for your team or organization.

Key Takeaways

• Slack makes money through paid subscribers and investors.

• Slack has four subscription levels that cost up to $15 per person per month — more if you choose the Enterprise subscription.

• Slack’s strategy is to hook users on their free version until they realize they need to upgrade to meet their team’s growing needs.

What is Slack?

Where Work Happens

The Slack app is the glue that holds companies and groups together. It is a SaaS instant messaging tool that is customizable to fit the specifications of your team’s internal communication needs. It has become a sort of a natural successor to email, as Slack offers daily active users a much quicker interaction.

How Does Slack Make Money?

Slack makes money a few different ways. First off, they have paid subscription plans. It is through paid subscriptions that Slack generates the majority of its revenue. With more than 100,000 paid subscribers, the subscription money they get makes up around 40% of their annual revenue. That’s not a small amount.

And because people are really seeing the value of Slack and what it can add to the efficiency of an organization, getting paid subscriptions is getting easier and easier for them.

By using a “freemium business model,” Slack develops a consistent customer base with a great free product, and then once that user base understands the app enough to potentially feel limited by it, gets them to switch to the paid versions, which offer a wider range of capabilities.

This graphic illustrates the growth of Slack’s paid user base over the past three years:

Slack went public in June of 2019. Before that, Slack raised a whopping $1.4 billion through 10 rounds of funding from some top firms. Being publically traded has certainly helped the company, but the main source of revenue continues to be from that growing paid user base.

Meet the Founders of Slack

Slack was co-founded by Stewart Butterfield and Cal Henderson. Butterfield was the co-founder of the digital image-sharing platform Flickr. Henderson was also a part of that Flickr team, leading the engineering through the Yahoo acquisition.

They both have a history of building companies toward the public domain and that is exactly what they have done with Slack.

How Does a Slack Workspace Work?

The main goal of Slack is to make complete collaboration easy and accessible — Organize, Track, Real-Time Communication. It does this by following 7 key features. These features are:

• Organized Conversations: The possibilities here are endless. You can create as many channels as you want. They are easily organized in the user-friendly interface.

• Trackable History: Slack doesn’t delete old conversations. It keeps track of all work and makes it very easy to go back and find past conversations.

• Secure Working Environment: There is a two-factor authentication method for accounts. This keeps every account safe and secure from possible hacks.

• Integration: Apps like Google Drive, Dropbox and Twitter can be integrated into Slack. This sets Slack apart from other messaging tools.

• Custom Shortcuts and Commands: It is easy to create keyboard shortcuts and commands other than the ones that are already defined.

• Audio and Video Calls: You can have audio or video calls with up to 15 people at a time. This makes Slack the one-stop-shop for all communication.

• Bots: There is an entire universe of different Bots. All of these bots have functions that are designed to make Slack more user-friendly.

Is Slack Worth Paying For?

Whether you think that Slack is worth paying for is entirely down to the ways in which you use it.

Someone who is using Slack solely to keep in touch with a group of friends, maybe for a Fantasy Football League, for example, probably wouldn’t find a paid subscription valuable and would want to stick to the free plan.

But someone who has 20+ employees across the world all working on the same project might find the ease of communication and efficiency that slack offers invaluable.

There are four different versions of Slack subscriptions:

• Free

• Standard

• Plus

• Enterprise Grid

This graphic will paint a pretty good picture of what those services entail:

There are numerous cases of businesses using the free version while scaling their business and then realizing that it was necessary to upgrade. This is Slack’s goal. To provide the tools to get started while also providing the communication tools to keep building.

So, How Much Does Slack Cost?

If you want to unlock bigger possibilities within Slack, this is how much it’ll cost you. For the standard subscription, which is touted for small and medium-sized businesses, you will pay $6.67 per person using the app on your account.

If your business is a little larger, and you need some of those admin tools, then you may want to go with the Plus subscription. This subscription is $12.50 per person using Slack on the account. That is the price if you pay for a yearly subscription.

If you choose to pay monthly, that price jumps to $15 per person. The cost for the Enterprise Grid subscription to Slack is not disclosed, and if interested you would have to contact the sales team.

Slack FAQ

1. Why is Slack better than email?

   Slack is better than email because it creates secure chat groups and threads for teams. For some forms of communication, email is still the best choice, but for collaborating on projects and other messages that require a lot of back-and-forth communication, Slack is often best.

   This is because Slack is secure, makes it easy to see threads and past messages, and is often faster than email. It also allows you to make audio and video calls and is highly customizable.

2. Is Slack owned by Google?

   No, Slack isn’t owned by Google. Slack is owned by Salesforce. Salesforce purchased Slack in 2021 for about $27.7 billion.

3. Who is Slack’s biggest competitor?

   Slack’s biggest competitor is Microsoft Teams, Google Chat, or RocketChat. Other competitors include Discord, Flock, and Chanty, to name just a few.

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.