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People should understand this: A free tier is a loss-leader, intended to support sales of the paid product. If too many “…have been happily using Slack’s free

• quickthrower2 4y ago
  Micropayments! When will this happen? Community needs hosting costs say $1k/y for all their needs. 1000 members pay $1 a year. But that is a lot of friction! Probably a human problem. The activation energy from $0 to $0.01 online is huge compared to the monetary difference. Suddenly you need a credit card. Whereas people would happily pay $3 instead of $1 for a drink because of convenience (convenience stores are an example!). Maybe the solution is an in browser card-free micropayments system that you load up as a browser extension. Something like web3 without the cryptocurrency or blockchain! Chicken and egg problem though.
  • rdbell 4y ago
    > without the cryptocurrency or blockchain If only we had a way to solve this problem using a solution other than the technology that already solves this problem.
    • oblio 4y ago
      That's just silly. We just need a web standard that hooks into the existing banking system. Put that into every browser. Just like in 99% of the other use cases presented for it, crypto is useless here. Absolutely no need for it.
      • freddie_mercury 4y ago
        Whose existing banking system? The Chinese one? The Japanese one? The Egyptian one? The Indian one?
        • oblio 4y ago
          The Ancient Roman one. The one most people use. SWIFT. And yeah, blah blah sanctions, Russia, Iran, like most of the world's business is happening there and like the crypto Ponzi schemers really care about the "under-banked".
          • runjake 4y ago
            The “ancient Roman one”? Enlighten me.
          • dalmo3 4y ago
            How's swift suitable for micropayments?
          • freddie_mercury 4y ago
            SWIFT isn't remotely suitable for micropayments. Most banks have to go through a correspondent bank that is going to charge at least $5 per transfer.
            • oblio 4y ago
              Ok, then use anything else or get banks to come up with another one. How, pray tell, would a cryptocurrency help here? You have all the crypto disadvantages (either untested or slow or scams or boiling the planet...) plus the same issue with adoption. We already have banks and they already have bank accounts. We have SWIFT, SEPA, etc. They know how to talk to each other. Get them to modify an existing protocol or make a new one for microtransactions. It's a super hard task but with crypto you still have that super hard task (adoption) plus crypto itself (a million drawbacks). It's not scientific and it's not engineering. You solve a problem with the simplest equivalent solution, no more. Crypto is like God. It gets sprinkled over every discussion. There's a reason science doesn't go: "A equals B plus God" to prove anything.
  • k099 4y ago
    Micropayments keep failing over and over again. I think it's because the friction of microdecisions of whether or not to pay for that individual transaction is tedious. "Should I click on that link? What if it's not what I want Hmm, better not for now." Biggest recent push was Blendle, which pivoted: https://www.niemanlab.org/2019/06/micropayments-for-news-pioneer-blendle-is-pivoting-from-micropayments/ https://www.niemanlab.org/2019/06/micropayments-for-news-pio...
    • bentcorner 4y ago
      They work well within ecosystems. See the any number of video games and gaming platforms that invent their own micro-currency. My kid plays roblox and every month or so asks for some of their allowance to go into their ecosystem. They spend pennies on different cosmetics with nearly no friction. That said, I don't think even "Web Points" would work for links. Maybe something like buying "Member Status" with "Web Points" for a month on a site could work.
    • dehrmann 4y ago
      I think the only micropayment people are usually willing to make is watching an ad.
    • saurik 4y ago
      And yet most people I know don't get microdecision fatigue every time they decide whether to turn on a light or use an appliance due to the electricity transactions. I claim that--to the extent to which this was ever an issue--this is due to the notion of "micropayment" really being too large still: the industry has often used this term to describe transactions on the order $1-$10. Instead, this discussion is about hosting fees for a chat app that will add up to almost nothing for light usage, not the $1 per article news companies keep wanting to charge. My company (Orchid) has been calling these fees for incremental hosting costs--which are on the order of $0.001-$0.10--"nanopayments".
      • philsnow 4y ago
        Look at tarsnap's pricing: https://www.tarsnap.com/ https://www.tarsnap.com/ currently it says "250 picodollars / byte-month of encoded data"
  • oblio 4y ago
    Google, Apple, Microsoft, Samsung, etc don't want a micro payment standard. Everyone dreams of not being the "dumb pipe" and wants a fat cut through their proprietary solution.
    • philsnow 4y ago
      I really wish there were room for a "your margin is my opportunity" player in spaces like this, but the existing cast already executes the "dumb pipe" role too well.
      • tpxl 4y ago
        Europe seems to be doing something on this front. SEPA Instant is... instant just like credit cards. All we need is an interface that's as easy to use as credit-cards (type number, money go) and the visa/mastercard monopoly is going to either get real cheap or real non-existent.
  • kyrra 4y ago
    This is such a hard problem. The very much not a secret secret of consumer payments is that all actions that people take are reversible. Things that are not reversible tend to not be as consumer friendly. This means things like Bitcoin and wire transfers. The problem when things are not reversible is an account can get hacked or you can be given incorrect wire instructions and lose a bunch of money and have no way to get it back. People love credit cards and similar products because there is a way to get your money back. In case you were defrauded in some way. Most systems have a chargeback mechanism of some kind. If you start building a system that supports micro payments, the cost of running such a service scales with the number of payments going through it. Such a system needs ongoing support to deal with chargebacks and fraud. And the people running a system need a way to make money. They can't just lose money on the operational support that comes with dealing with chargebacks and fraud.
    • sweetbitter 4y ago
      You didn't fully read the post you responded to. They were not suggesting a non-reversible medium.
      • kyrra 4y ago
        Oh, I read it. I'm saying that building a system that supports microtransactions that are reversible is cost prohibitive due to the customer service aspect required. If someone could pull it off, it would be a game changer. I believe many people want to do this, but no one has been successful yet. I point out Bitcoin as it is non-reversible, and there is no central agency you can complain to if you get your bitcoins stolen. This prevent adoption from much of the public.
        • sweetbitter 4y ago
          That makes sense, it seems that I was the one who didn't properly read your comment.
  • jwr 4y ago
    In the EU at least, this is impossible because of invoicing and bookkeeping/accounting requirements.
    • datavirtue 4y ago
      Hmmm...Starbucks does this by charging me a lump sum in one transaction and then allowing me to spend it down over time in smaller chunks. I doubt this is viable in general though, due to the cited support issues around reversibility.
      • jwr 4y ago
        Oh, that is even worse! Only big corporations can afford to do this, as this borders on banking services and you need good legal grounding for this type of business. I should probably clarify that by "impossible" I really meant "does not make business/economic sense". You can do microtransactions with individuals, but if you're spending €2 (rough estimate) per transaction for invoicing, accounting, VAT processing, etc, it no longer makes any sense. Thus "impossible".
  • frxx 4y ago
    Makes me remember flattr. That was great and I still miss it.
  • dehrmann 4y ago
    I am a little frustrated that there are services I would pay $1 per month for, but the floor for monthly services is usually $10, occasionally $5.
    • thaumasiotes 4y ago
      It's very expensive to charge someone $1. It wouldn't make much sense to charge $1 / month for a service like that; you'd want to charge $12 / year.
      • nottorp 4y ago
        Who charges 12/year? It's more like 10/month and 100/year :)
        • immibis 4y ago
          IIRC I paid $15/year upfront for Nebula+CuriosityStream. Doesn't seem a bad way to do things. (Whether $15/year is a sustainable price for N+CS is besides the point)
  • nottorp 4y ago
    Slack is $9/user/month :)
    • Jill_the_Pill 4y ago
      You know, I'm under the (possibly wrong) impression that it's $9 per workspace per month, and as a professor, if you include all the workspaces I was maintaining for my past classes, I have . . . or had . . . about 25 of them with hundreds of users. Maybe I wasn't using it the most efficient way, but I had no reason to think I needed to be strategic. And to think: I used to tell classes we were using Slack so their access would persist after they got kicked out of Canvas when they graduated! It should have been possible for Slack to start the new limitations on new workspaces only. This term, because I started the change too late, I will continue to use Slack without enthusiasm while keeping a shadow archive (possibly in piazza but they have also begun to charge for larger classes). For next semester we will find and use a different service.
      • nottorp 4y ago
        > You know, I'm under the (possibly wrong) impression that it's $9 per workspace per month It's per user sadly. Apparently $8/mo now if paying monthly. Of course if you go to their pricing page they lie and give you the price for paying yearly.
• verdverm 4y ago
  There is an argument to be made that while it looks like a loss in a limited time frame, having all those new developers become advocates later on will pay itself back --- edit, I thought I was on the Heroku thread... though a similar argument might be made still
• joshspankit 4y ago
  True, but there’s also something vital that does not show on the balance sheet (and can sink companies): Excellent tools spread through the best kind of word of mouth. Excellent tools that are free spread even faster and further. There’s no way to know how many corporate plans were sold because a single team member relied on Slack outside of work, or how many pro user accounts exist because someone was visiting a Slack-fluent friend. And because there’s no way to know; the cost-cutters look at the numbers and say “cut the free plan enough to stop the hemorrhage”. Worst part is the next quarter looks great. And maybe the one after that. But soon enough the income starts dropping and there’s no “clear reason why” and then it’s too late to recover it. It has to be built again by building trust from scratch.
  • onlyrealcuzzo 4y ago
    There's not many ways to know many things with 100% certainty, but you can have a decent probability of knowing the impact the free tier has.
  • xmprt 4y ago
    Makes me wonder how long before Discord rolls out their enterprise tier. There are tons of Gen Z and Millenials using Discord who are likely in positions where they can make those kinds of decisions for the company. And it's a great and intuitive product too.
    • echelon 4y ago
      Discord is way better than Slack for B2C if you're reaching that demographic. I'm running my start-up via Discord and it's grown to a 60,000-member community. Incredible engagement. Fantastic way to find customers and business use cases, too. For "enterprise", we run a separate instance for staff with lots of useful Github, Clickup, and other integrations.
      • dqpb 4y ago
        My experience is that discord is basically just a vector for scammers to directly message me.
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• domador 4y ago
  The need to pay for storage is understandable, but in trying to turn free-plan users into paying customers, companies seem to misunderstand how seemingly small pricing and feature changes can make their product entirely unappealing. How many of Slack's free users would have been willing to sign up in the first place if they knew a 90-day-history limit would be implemented one day? How many would have signed up at all if they knew that at some point they'd be forced to go from paying nothing at all to paying $87 a year per user? I understand that to some companies their free or low-priced tiers end up being more of hassle than it's worth. But an $87 jump in order to access essential, previously available features seems like a good way to chop off your long tail of low volume users. Such a change could be deadly to a service's popularity and long-term prospects. Or maybe not.
  • rtpg 4y ago
    low volume users unprepared to pay anything to Slack ever are low value users. There is an argument for a more granular pricing, but if I were Slack I would also want to jettison the "community" slacks
    • ThunderSizzle 4y ago
      Low value users should be okay though, because they should also be low-cost users.
    • deleted 4y ago
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    • californical 4y ago
      I use Slack’s free version in a 2-person workspace with just my partner. We use it to message each other during the day. It probably costs Slack almost nothing, but now we’re getting somewhat cut-off. I’ve also advocated for Slack at my company of several hundred employees, at multiple previous companies, and would’ve continued to at future companies. Mostly because they’ve had goodwill and been a joy to use in my personal life. But now I’m mad at them, and going to move to a new chat platform, with my partner, on our tiny little instance. Will me being mad at Slack affect their bottom line? Probably not today… but when more people like me have moved past Slack and see it as old annoying tech, maybe it’ll start to have an affect. We’ll see.
• charcircuit 4y ago
  >but that it will gone in the relatively short term I've had data stored by Google and Dropbox for free for over a decade. Even Discord has stored all my messages and files for over half a decade.
• jwr 4y ago
  Not necessarily. I offer a free tier because I want to, as a service to hobbyists and makers. It is not intended to be temporary. It's also not an upselling tool: features are distinctly different and there is no paid plan that would make sense for hobbyists. Not every business is a VC-funded growth-above-all meat grinder.
  • gridspy 4y ago
    Admirable! But there is still a profit incentive. Users who have been running a hobby or community on your SaaS today might be creating a startup or advising a corporate tomorrow. So while the community might never need your paid product, the very same users might create separate, paying accounts.
  • marklubi 4y ago
    Thank you!
• zmmmmm 4y ago
  Well, what you said applies even if you are paying for something, if the price is unsustainable for the service provider at scale. The real question you have to ask is, "is my use of this service providing a sustainable benefit for the owner". If not, you can guarantee it will go away or change eventually. If it is, it's probably OK even if its free. For example, I don't expect Google search to go away, even though it's free.
• marricks 4y ago
  Saying we should expect companies to destroy the free tier is a bit of an insult. The internet was full of free things and companies have been shoving them in our faces for decades. - "Free gigabytes of mail storage!" - "Free communication with your teams" - "Free internet hosting for hobby projects!" The free tech offerings are just good enough to kill open source or entrenched alternatives. The goal is to suffocate them. Once the competition is gone or investors demand more money destroy the tier/raise prices. FB is trying to do that to Craigslist with marketplaces, Uber and Lyft and doing that with Taxis, AirBnb with... etc etc etc
  • wolpoli 4y ago
    Don't forget how "free unlimited photo storage" ended too after competitors shifted their business model.
  • numpad0 4y ago
    Yes, and I believe the model is as follows: - infra costs sustainably decreases, exponentially; - user signups almost-sustainably increases, exponentially; - OpEx may increase, linearly; - therefore, profit and scale almost-sustainably continues explosion to a rather enormous scale, landing founders with astronomical wealth. - and this, by the way, is why charging users for actual costs is pointless. Harmful even! We’re offering values, not collecting fees. We’re going for the moon! Forget about gases for cars, we can pay out of the pocket. That’s irrelevant. This actually worked for decades, hence the free tier. And the first two bullet points stopped working last midnight. And now Houston is working on a solution.
• baby 4y ago
  The same is to be said to a company no? If you offer free tooling for too long, pulling the plug will upset a lot of people
• onion2k 4y ago
  A free tier is a loss-leader, intended to support sales of the paid product. Or to stop people moving to a competing product in order to stifle competitors. Or to leverage a network effect to grow the user base to support investment. Or because the company simply believes their product should be accessible for free. Using a 'freemium' model is a common approach to revenue growth but it isn't the only reason for a free tier to exist.
• jbverschoor 4y ago
  Well there was this episode of I think a16z, where initially they used the free accounts in their numbers (around, churn, etc). But later around those to marketing and cac instead. All of a sudden everybody is happy, while nothing changed
• pjmlp 4y ago
  They also have to understand, every single business outside computing, pays for they work tools, even if they got them at some flea market.
• victor9000 4y ago
  Yeah, but this is the equivalent of Costco raising food court prices to match real production costs. Costco would never do that, of course, because they understand how a loss leader works. The real solution is to reduce costs using vertical integration, so if AWS storage is your main cost driver then start building your own data centers. Instead, this move will harm their best customer acquisition channel, negatively affecting long-term growth.
• klelatti 4y ago
  Doesn’t have to be reality. Even when a firm is profitable and has scale it can still act as a funnel for new business. It also helps to keep some competitors out. One less toehold for newcomers to get traction in a market. Just look at the comments on the recent Heroku announcement - how many will now consider an alternative option. More likely management have lost interest in growth and are looking to squeeze as much out of the existing customer base as possible. Not usually a good sign for investors or users.
• threatofrain 4y ago
  Would one say the same thing about GitHub?
• flohofwoe 4y ago
  On one hand that's true, on the other hand search is mostly about text data which has negligable storage size requirements (they could just say: we'll keep the search history for ever, but drop large binary blobs like images and videos after 90 days).
• oxfordmale 4y ago
  If Google had bought Slack, the free tier would almost certainly have stayed. Of course the compromise would be that you would be served ads and you would have to agree your Slack messages would be used to target those ads to your specific interests. Salesforce is where products go to die. Slack will eventually get integrated in their Frankenstack and lose functionality. Salesforce can afford this strategy as long as they can keep charging $$$ for their CRM software that genuinely deserves its own circle in hell.
• hnarn 4y ago
  Everybody understands this. Here’s what companies don’t understand: if you promote your product through a loss leader — which is arguably how Slack became popular in the first place — changing your pricing at a later date will piss people off. You’re trying to put the blame on the consumer here which never makes any sense from a business perspective. If your loss-leading pricing strategy was unsustainable from the start, that’s on you. It doesn’t matter if the product is “worth it” because when you piss people off, they will gladly put in effort into migrating to another provider they can trust, because that’s what it’s all about: trust. The latest Google Apps fiasco is a great example of this, where Google eventually had to backpedal due to the massive backlash. It’s simply a consequence of just staring at the numbers, without properly understanding the psychological effect of taking something away from what is, despite the zero income but rather in a sense of trust, a customer. It’s just a customer you failed to get any revenue out of, and that’s your fault, not the customers. Changing pricing pisses people off. Killing features pisses people off. Bad communication pisses people off. It’s really not that hard. At the end of the day you’re making a deal with the devil with these overly optimistic loss-leaders, because you’re getting growth you never would have gotten otherwise. Failing to capitalize on that and then blaming the users while throwing features out the window is just not good business practice.
  • fennecfoxy 4y ago
    It's not trust they migrate for lmao, it's things that are "free". People are irrationally outraged when they have to pay for a product or service that was previously free. Especially considering all of Google's products/services, people still cry about Youtube ads/having to get Youtube premium. People are so freaking self-entitled.
  • chrisseaton 4y ago
    > will piss people off Well it pisses off the people who aren't paying you anything. It probably pleases the people who were paying you, because now they don't have to subsidise the people who aren't.
    • jylam 4y ago
• 5350-uiop-1130 4y ago
  > If you aren’t paying for it, it is definitely temporary the reason big SV VC are shilling web3 so hard.
• hn17 4y ago
  I think they made a mistake disallowing single user upgrading to paid plan. Non-corporate users will migrate to Discord, Slack will cut resources costs = more money without new users. Everyone happy, just allow us to export data ;)
• throwaway1851 4y ago
  My family has been using Slack for several years to share/store odds and ends like recipes and bookmarks. When I heard about this change, I did a full data export. After 5+ years of not-infrequent use, the data blob was all of 1.5 MB. Virtually nothing.
• davnicwil 4y ago
  The free tier usecases don't themselves need to convert for this to work out long term. They do need to convert the same customers for other usecases though - usually work. Keeping the free tier indefinite (in time, if not in storage) helps to keep the product used, therefore top of mind, therefore the default choice for the latter when those decisions come around. Or, even where the user is not the decision maker, they will likely still be an advocate / non-complaining user at the least. Just directly trying to convert the free usecases by time-limiting them so as to make many of them unusable feels like more of a short term 'upcoming quarters' geared strategy. For sure they will convert some 'real work' usecases here who are able to function in the current space-limited free tier, as well as saving some costs on compute and storage, and it may boost numbers in the short term. But long term, is it the best strategy? If all those free users now switch to, say, discord, guess which tool gets picked more for the 'real work' usecases by those same people in 5 years. Over that timeframe, will the savings in resources have been worth it? I guess this analysis must have been done, but it feels very possible the answer will turn out to be no.
  • HelloNurse 4y ago
    Long term, users learn not to trust cloud services that are based on taking the customer's data hostage: not only the loss leader free tiers that are too good to be true, but anything.
• shrimpx 4y ago
  They should make an exception for low volume/infrequent users. Yes free-tier power users should get incentive to level up. But if you have a slack with your spouse for house ideas where you post a few times a year, I think this is the type of user that gets the most pissed off by limits, because leveling up to the paid tier for a few messages a year seems like a ripoff/moneygrab.
• michaelvmata 4y ago
  That's not necessarily true. I have several free Slack groups that I've used for years. I haven't paid a cent. But it means I've also have Slack installed by default. At every company I've worked, I've supported using Slack because I'm a happy user and these companies have shelled out for paid plans. It feels similar to how MS Office is given out for free to students and sold to companies.
• ummonk 4y ago
  The issue is that people are usually members of multiple organizations on Slack, most of them free but some paid. A change like this that retroactively impacts non-grandfathered chats (especially chats which are low usage and likely low infra cost) is going to alienate people who may at some point have decision-making power over an organization’s choice of paid chat service.
• ordiel 4y ago
  I agree with your comment, but most importantly, I hope (tho I know it won't happen) this helps people to open their eyes and realize the importance of self hosting their own stuff, I could understand that maybe 10 years ago it wasn't just as easy but now days if you are trully a small team or one with very low transit you can host your stuff even on a Raspberry PI and it would not be more expensive than permanently keeping a light bulb on besides granting you tons of flexibility. I mean, if you are less than 10 people you can even use that same hardware to keep a IM server and possibly a simple web page or some other application of interest, honestly that's what you get for being too cheap