How Slack will break the SaaS pricing model as we know it… for the better | by Jake Dunlap | SaaS Growth Strategies | Medium
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What Is The Old Model?
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 has been the recipe for the last 10+ years and it worked.
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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 it in advance. If you buy 100 seats in year one, you still have to guess on year two.
- 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.
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What Is Slack's Fix & Why is it brilliant?
Commit to seats but only pay for active users.
- It puts usage on products' shoulders rather than sales. Product is incentivized to make things simple and drive usage.
- 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 it.
Additionally, this leads to larger MRR much earlier in the client relationship which short circuits the upsell and penetration process by years.
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