In a humming newsroom like ours where collaboration is central, US-based workplace collaboration and messaging app Slack is a lifeline. As it is to numerous start-ups across the globe. Over 750,000, in fact, as of 2021. But the thing is, over 80% of that number are free ‘starters’—those who are on the free plan with restrictions around search and integrations. And India is one of the biggest free starter markets out there for Slack. India has always been a special case for the company, though. For years, Slack has been pursuing a deep discounting model in the country, offering a 62% mark down on dollar prices. Those in the industry say the discounting was sorely needed—India is a very price-sensitive market. Start-ups just getting off the ground aren’t going to be paying US$8 or more for Slack’s paid plans. The discounts meant Indian companies could use the software for as little as US$3. One can argue that Slack can afford these discounts, given that it has margins upwards of 80%. But Slack has been bleeding money for quite some time. In the time since its acquisition by Salesforce in December 2020, Slack brought in global revenues of US$592 million, but also notched up a pre-tax loss of US$1.11 billion.
Free starters don’t exactly bring in a lot of money for the company. They, however, do take up quite a bit of resources in terms of customer support. Solution? A price hike. For the first time in its nine-year-history, Slack has raised prices for its ‘Pro’ tier by 9%. But, it's still planning to continue its 60%-plus discounts in India. Counterproductive much? The reason lies in its rival, Microsoft Teams, the product that launched three years after Slack and still managed to surpass it in terms of user base
