Workplace messaging platform Slack was acquired by Salesforce.com Inc (NYSE:CRM) in July 2021. One year after the acquisition, the company is announcing its first pricing increase since its launch in 2014.
What Happened: Slack announced pricing changes for its Pro customers and several updates to its Free plan.
“Over the years, we’ve expanded our product offering, including flexible tools to connect in more ways, robust security features, app integrations, workflows, and much more,” the company said.
The prices of the Pro plan will go up on Sep. 1, 2022. Customers who pay on an annual basis can renew early to lock in the current annual rate prior to the price increase, the company said in a blog post. Customers who pay monthly can also choose to switch to the yearly Pro plan prior to Sep. 1 to lock in the cheaper rate.
The Pro plan will increase from $8 per month to $8.75 per month for monthly billed customers. The Pro plan will increase from $6.75 per month to $7.25 per month for annually billed customers.
The company’s free plan will remove 10,000 message limits and 5 GB of storage caps and instead give full access to 90 days of message history and file storage. The free plan will also now have expanded access to features like file retention settings and clips.
Customers on the free plan will lose access to files, messages and clips older than 90 days beginning on Sep. 1.
Related Link: Salesforce Q1 Earnings Highlights: Revenue And EPS Beat, $42 Billion Remaining In Revenue Under Contract
Why It’s Important: Slack is increasing the prices for its Pro plan and not for its Business Plus or custom enterprise plans, which could lead to more customers shifting to the other plans.
The call for people to lock in rates with annual subscriptions could boost revenue for the upcoming quarters.
Customers on free trial plans will also be encouraged to upgrade to a paid plan, which could boost paying subscribers. Customers who have free plans can pay to unlock the messages and file history that is hidden after 90 days.
Salesforce beat revenue and earnings per share estimates from the street in the first quarter. The company mentioned future growth that could apply to the Slack pricing increases.
“While delivering incredible growth at scale, we’re committed to consistent margin expansion and cash flow growth as part of our long-term plan to drive both top and bottom-line performance,” Salesforce CEO Marc Benioff said.
CRM Price Action: Salesforce shares were up 3.53% to $173.81 on Tuesday, versus a 52-week range of $154.55 to $311.75, according to Benzinga Pro.
