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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 popu

by 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
  Not that the price will go down. Now they subsidize shareholders, which is quite worse in my book.
  - PedroBatista 4y ago
    Same way my customers subsidize my dinner, I’m sure shareholders didn’t get in for free.
- soraminazuki 4y ago
  Most paying customers are businesses. Those businesses are definitely not going to be pleased because they have people who personally depend on Slack's free plan. So, they've probably pissed off a significant number of paying customers.
  - chillfox 4y ago
    Yeah, people tend to forget that companies are just groups of people working together.
- kzrdude 4y ago
  But the company was built on that user growth. They were reporting the numbers to the investors and claiming "2.???; 3. Profit" all along. Especially now, with recession coming (interests rise => expectations of profitability increase), it's unfortunately suddenly important to show real profits.
  - chrisseaton 4y ago
    > But the company was built on that user growth. Yeah… and now they’re grown to a size where everyone knows the product and they don’t need to get people interested from scratch in the same way.
  - pid-1 4y ago
    If subsiding free users isn't attracting more paying customers, then slashing free tiers is a no brainer though.
digitalengineer 4y ago
Same with Evernote. Massive ‘growth’ on the free plan. No good way to capitalize, so they just started deleting features and locking people’s content in. There is no regular export to get everything out and you need to jump through a lot of hoops. I wish I never updated that app…
- soheil 4y ago
  Not to mention 1Password
  - karamanolev 4y ago
    I wouldn't mention 1Password. It's a cornerstone for your digital security, if you're using it. As such, I don't want it free, I want to pay for it. My current family plan suits us very well and I'm very happy. Security is hard and I want it done right. Not to say that free tools are bad and paid tools are always good, but it certainly helps. I also do want "easy" things to be free, like a note-taking app.
    - joshspankit 4y ago
      I think OP is talking about how 1Password stopped letting you use the one-time-purchase version and pushed everyone to the subscription. Personally, I was pretty frustrated at that shift because I successfully and happily used old versions until it was “time” to update (2 then 4 (which was at the upgrade cost), then one more before I was pushed to the subscription). It always worked great. Tbh I’m still frustrated that their choice to self-host the syncing service became our costs (I used Dropbox just fine and that didn’t cost them anything), but now that I’m past the sticker shock (my costs easily went up 8X) I’m more comfortable with the stability of their company and breathing room they have to build the hard technology. Thanks for bringing it up: 1Password is a necessary example for this debate.
      - dasil003 4y ago
        I, too, have fond memories of the old one-time purchase modality of software vending, but I have to admit such an arrangement is largely untenable for any software company which wishes to maintain a high quality product across multiple platforms over the long haul. Regarding building in their own sync, I think it’s actually a good thing. Naively syncing encrypted files can’t achieve the reliability of conflict resolution that a semantically aware app-level sync can. On a side note, I moved away from Dropbox a couple years ago as their product became bloated as they seek growth with increased desperation. That is not a trait that I want in a company I allow to install kernel extensions on my machine.
mstipetic 4y ago
I think this should be outlawed. So many industries destroyed by cheap vc money, and then trying to raise prices once everyone else is gone. You can lose money doing research all you want, but the moment you start interacting with the market there should be a time limit until you can get your unit economics to work, or get out.
- soheil 4y ago
  So you're suggesting any startup that can't get its unit economics to work should have its founders sent to jail?
  - mstipetic 4y ago
    Not too jail, where did I mention jail? Stop selling and messing up the market, just shut it down and go do something else that creates value
  - mauvehaus 4y ago
    Under certain circumstances, the IRS will consider your business a hobby if it fails to make a profit. The consequence being that you may no longer write off your business expenses on your taxes.
    - kfarr 4y ago
      It’s a few years IIRC, something like 3-5 years
- webmobdev 4y ago
  I agree - "free" should be anti-competitive. Today it is incredibly hard for any startup to compete with the "free" products of BigTech. And that is why in this industry, getting acquired by them is the only really viable exit option available for many startups.
  - bdlowery 4y ago
    This is why I’ll never use vscode.
dvfjsdhgfv 4y ago
> 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. This is part of the game: 1) work hard to make something popular by offering a part of it for free, 2) once enough people get hooked, start tightening the terms, 3) most people will be pissed off but your profit is from those who stay (because they invested too much to just migrate away).
- voakbasda 4y ago
  If those companies had a shred of integrity and respect for their customers, they would be upfront about such plans. Without a roadmap, user trust will eventually be shattered by step 2. Most people understand this shell game, and they will put up with it if they know what to expect.
  - kennend3 4y ago
    I'm sorry, but are the plans not obvious? Companies are not some altruistic group, and this pattern of "free to get you hooked then convert to a paying customer" is almost as old as computing itself. What is odd here people depending on slack for search history and not creating a proper KB?
pid-1 4y ago
Does Slack even care if folks not planning to pay are pissed? My understanding is this sort of strategy wants to archive some sort of network effect so business (which actually pay for services) start adopting a product. It's meant to kickstart recurring revenue, not to last forever.
- ajsnigrutin 4y ago
  I mean.. it kinda does. If a small opensource dev group gets pissed at slack, and those people have a say in a chat solution at their workplace (paid plans there of course), pissed people won't recommend slack but other alternatives.
- Kye 4y ago
  The people who use Slack for their weekend DnD group are the same people who bring it into the companies they work for during the week and ultimately suggest a paid plan. That's the entire idea behind freemium: just because someone doesn't get their own credit card out doesn't mean they don't influence the person who does.
  - pclmulqdq 4y ago
    That's exactly how I ended up having a paid slack subscription. It looks like discord is going to take over several companies exactly for this reason.
- TheGeminon 4y ago
  Don't know if it is their intention, but this is probably more of a cost-cutting measure than a revenue-increasing one (or maybe even a technical one, with their data strategy/partitioning it may be much easier to do everything time-based). Many people expect free things to stay the same forever, which obviously isn't realistic, but this is still going to have a damaging effect on their brand. As well with the free tier, there are a ton of OSS projects, community groups, etc. that will no longer be using Slack, and the network effects will drop substantially. This has been seen a bit with Discord, so maybe they are going all-in on dropping these types of customers. There can't be _that_ many people who are on the free plan that will now be migrating to paid with this change. If anything, it now incentivizes larger groups (which would generate more revenue) to use the free plan since data is gated by time, not by usage. A slack instance with a few thousand active users on the free plan was basically unusable, 10k messages can be eaten up rather quickly. Now if you only care about the last 90 days (which honestly, isn't a bad idea with Slack to not use it as permanent storage) you can have a much larger group on the free plan.
mmcnl 4y ago
I think if you are on a free tier and your business depends on it, you should anticipate for changes in said free tier. If you want guarantees, you need to be a paying customer.
- paulgb 4y ago
  I agree, but what's happening here is largely not businesses behind the exodus, but loose organizations like open source communities. You could argue that these are freeloaders and not Slack's problem, but I'd be wary about sending so many users running into the arms of their competition. Part of the appeal of Slack was that I could use one app for everything, which is increasingly not the case.
ghaff 4y ago
>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. I'd argue that most companies understand that perfectly well. They have a generous free tier to drive growth. Once that growth is attained and demand starts to level off, it's time to trim the resources devoted to free and force users (to greater or lesser degrees) to either start paying or go use someone else. There's great wailing and gnashing of teeth for some period of time on HN, Twitter, etc. but life moves on. It's a pretty predictable playbook. See also Heroku of late. It should probably also come as no surprise we're seeing a number of examples of this going on at the moment.
- ryeights 4y ago
  Note that Heroku and Slack are both owned by Salesforce.
  - ghaff 4y ago
    True. So the timing is probably not entirely coincidental.
- gdilla 4y ago
  Yup, and they think pissing people off is worth it (for their expected benefit). And... they're probably right. People have short term memories and other things to worry about.
  - madeofpalk 4y ago
    What's the cost of pissing free-tier people off? None of this has really impacted paying customers, right?
    - bombcar 4y ago
      Some percentage of free tier people are also paying on other accounts, and some will be lost. But it’s probably a small amount because SaaS has figured out to basically milk slacktivism. People will complain but pay.
webmobdev 4y ago
Very true. Reminds me of what Seth Godin wrote on how the internet has changed people's behaviour: > Most people, most of the time, don't buy things if there's a free substitute available. A hundred million people hear a pop song on the radio and less than 1 percent will buy a copy. Millions will walk by a painting in a museum, but very few have prints, posters or even inexpensive original art in their homes. (In the former case, the purchased music is better–quality and convenience–than the free version, in the latter, the print is merely more accessible, but the math is the same–lots of visits, not a lot of conversion). > We don't hesitate to ask a consultant or doctor or writer for free advice, but often hesitate when it involves a payment. ("Oh, I'm not asking for consulting, I just wanted you to answer a question…") And yes, I'm told that some people cut their own hair instead of paying someone a few bucks to do it. The bet a creator makes, then, is that when she gives away something for free, it will be discovered, attract attention, spread and then, as we saw in radio in 1969, lead to some portion of the masses actually buying something. What's easy to overlook is that a leap is necessary for the last step to occur. As we've made it easier for ideas to spread digitally, we've actually amplified the gap between free and paid. It turns out that there's a huge cohort that's just not going to pay for anything if they can possibly avoid it. > As the free-only cohort grows, people start to feel foolish when they pay for something when the free substitute is easily available and perhaps more convenient. Think about that–buying things now makes some people feel foolish. Few felt foolish buying a Creedence album in the 1970s. They felt good about it, not stupid. This new default to free means that people with something to sell are going to have to push ever harder to invent things that can't possibly have a free substitute. > Creators don't have to like it, but free culture is here and it's getting more pervasive. The brutal economics of discovery combined with no marginal cost create a relentless path toward free, which deepens the gap. Going forward, many things that can be free, will be. Source: The game theory of discovery and the birth of the free-gap - https://seths.blog/2011/06/discovery-free-145/ https://seths.blog/2011/06/discovery-free-145/
- watwut 4y ago
  One obvious difference is that hairdressers don't run around yelling "free haircuts we will give you free haircuts look at us how we give away free haircuts". What the companies are doing here is that they are trying to kill paid competition, hold on longer and raise prices once competitors don't exists. They really dont have a standing to complain about situation they themselves created in the hope that competition will die sooner and in the hope users will be locked too much without any chance. > Millions will walk by a painting in a museum, but very few have prints, posters or even inexpensive original art in their homes. Now, this analogy does not work at all, because going by the painting in the museum in no way implies you would want it at home. And that many people dont go to the museums in the first place ... and those who go are more likely to buy some serious art. The other reason it does not work is that people have tons of inexpensive art in their homes. It is ridiculously competitive market. Posters, cups bought only for their pictures, figurines, people buy all of that.
daniel-cussen 4y ago
That makes sense. It was a race to the bottom. Now we're at the bottom. It's like 2001 in a lot of ways. Spesh the terrible economics of websites, or apps, or call them almost whatever they want, platforms, anything. Giveaways bring users. Free beer people show up. Like there's no business here. No excludability. It was a prettification of IRC, which of course nobody pays one fuck of a cent for, and now they want to charge...well guess people will go to IRC directly. And maybe there'll be an FOSS prettification. And that'll be it.
- TheFlyingFish 4y ago
  >It was a prettification of IRC, which of course nobody pays one fuck of a cent for It's a lot more than that. Addimg a persistent message history and multi-device identities to IRC is pretty huge, otherwise bouncers would never have existed. And the number of paying customers shows that people are, in fact, very willing to pay for it. Slack just really sucks at b2b marketing, which is why Teams eclipsed them so quickly.
  - redler 4y ago
    Regardless of their B2B marketing strategy, it's hard to compete with "this Slack-like thing is included with the mega-expensive Microsoft license your company already pays for every year, around which you've built a Microsoft-specific IT group".
  - daniel-cussen 4y ago
    Well there's different market segments. Me on one market segment, I'm the guy (nice to meet you) basically the way a sow has a runt, on the off chance she can feed it, that's the same basis companies hire me. And only very fucked companies. The basic reason is because I got tortured with an amnestic lobotomy. I had a very marketable curriculum until that point, and after that if for instance I was asked where I worked during April 2009, I would ask "are we talking about the Gregorian Calendar, that shit?" So for me you have to provide amazing shit for me to subscribe to anything. And it can be done. Not often. I can't have 7000 apps draining me $5 a month. That is why I identified a natural limit to the number of web-app subscription-model startups there could be, the first limit was remembering all the credentials to use them, which 1Password and similar surpassed. One user here talked about having 800 web app username-password credentials on his 1Password, obviously doesn't pay any scratch for most of them. Veteran of the freemium model, like I became a veteran of the psych ward in my remarkably successful struggle under torture, including not caving to the torture. I talk about this at https://news.ycombinator.com/item?id=32620302 https://news.ycombinator.com/item?id=32620302 So my segment of the market, I'm gone. Neither feature you mentioned seems...wantable. And that goes for most web apps, like I predict their business model and then operate on that basis. So for instance most VPN's are, as a business, honeypots. Like yeah you can steal from the labels who steal music from the artists, that you can do, but for tricky nitty gritty, nah. It's just too obvious, it's just too instantaneous an erection the founder gets thinking of cutting deals with Kuwaiti Intelligence during the commercial of them going on TV saying "We never have and never will cut a deal with Kuwaiti Intelligence." So with the paying users it's like ice on land, they need the ice on the sea in order to hold them back from falling into the sea. Non-paying users provide a lot of value to Slack, in that for instance you can do a trial release on them to debug your product for the paying users. For example. "Slack just really sucks at b2b marketing" well compared to Microsoft yes. Slack sucks at marketing compared to Microsoft, for B2B. I buy that. The guy Butterfield (Stuart? Something) was busy getting on magazine covers like it is still the previous millennium, which for businesses loses credibility. So I went to slack.com and tried finding what they charged, they wanted me to see all their flair first. So I went to the URL which said https://slack.com/features https://slack.com/features and replaced "features" with "pricing" and there it was, the chart with the numbers they want. So they want $8.00 USD a month for their product, and assumptively propose you buy it for the year at a pro rata price of $6.67 as the default. I looked for their asterisk at the bottom of the page, but it wasn't there. No this was a javascript asterkisk, no relation to asterisks in eg legal document. So $8.00 a month, per user. So that right there is a turn-off to an informed buyer, which B2B is. There's typically a designated person in the office for this sort of purchase and she herds the company's users through the spam, the spear-fishing, the shitty deals like this one, every everything. Apparently Teams is in fact the better product, and that might be because the terms of service aren't demonic (though I vaguely recall them yes being demonic which is why I couldn't use it, but then from the dodginess in revealing the price I divine Slack's terms are demonic too). But whatever. In for a penny, in for a pound, sell your soul, no reason to pray. Microsoft already has telemetry on like blood type in the first 18 minutes so it's not an additional leak to work with them. And that's saying as someone conflicted about the company, I like the way they didn't fuck up github for instance. Didn't nix it. Like they never even bought it. It works better now, in fact, I can tell it has more integrity and reliability. Backend stuff.
rkangel 4y ago
> The latest Google Apps fiasco is a great example of this, where Google eventually had to backpedal due to the massive backlash. In what way have they back-pedalled? I'm affected by this and hadn't heard anything.
- Terretta 4y ago
  They delayed the cutover multiple times. They gave people 3 months free. They gave people a year at 1/2 off. And finally they gave anyone who declared themselves as personal/family use only back the free option, even after having migrated to a billed option. (And, if you’re affected by Ukraine vs. Russia, deferred indefinitely.)
  - rkangel 4y ago
    I didn't know about the last option! They didn't exactly notify us about the option... I have now selected it, thanks!
    - bombcar 4y ago
      Yeah they were very good about announcing the paid version. The backpedal was quiet. https://support.google.com/a/answer/2855120?hl=en https://support.google.com/a/answer/2855120?hl=en For those watching at home, if you signed up to pay you may still be able to switch back.
kennend3 4y ago
> You’re trying to put the blame on the consumer here which never makes any sense from a business perspective. Consumer: noun 1. a person who purchases goods and services for personal use. It is sort of weird that people don't pay for a product, yet expect to be able to use it forever? It should be obvious that companies intend to convert "users" to "customers"? You call them "consumers" but they are not given the have not paid for the services. Maybe "users" is more appropriate? Do let us know what products you produce, and give away for free for years and dont want to monetize, it is just a charity thing for you even thought it costs you money to offer the service.
- jonathanlb 4y ago
  Users generally don't like surprises. As a user or consumer, it an unpleasant surprise that feels like a bait and switch when the free product you used now requires payment without prior warning. At least smaller apps are upfront about the duration of the free trial, and there are no surprises (or uproar) there.
  - kube-system 4y ago
    If those people wouldn’t have purchased the product, does it matter that they’re pissed off?
    - atomicfiredoll 4y ago
      Who says they wouldn't have purchased the product? I've been hoping that Slack would provide communities like mine better plans or options to support them and access some of the improved features. But, this move makes it pretty clear they're never going to, so I'm finally going to bite the bullet and set up Matrix. [Just to add to this, I've had my users asking me why we're on Slack when everybody else is on Discord. (Most of us use Slack at work, so it's convenient in that sense.) I've been interacting with the company since Glitch/Tiny Speck. But, with pushback from users and from the company, at this point I just can't justify Slack for our particular use case.]
madeofpalk 4y ago
> if you promote your product through a loss leader To be fair, I don't think Slack ever actually did this. Slack has always been pretty terrible for semi-public communities, and I don't think they did anything to promote this. Free slack has always had pretty annoying retention and storage limits, and others like limits on how many integrations you can add. I think Slack's problem has been that reasonably (at least in the beginning before Discord got popular and copied all of Slacks features), people liked Slack from their experience at using it for work. Indeed, Slack's advantage has/had been in appealing to the hundreds/thousands of employees making something they would want to use.
- GekkePrutser 4y ago
  I know many public communities that use slack. A major one is MacAdmins which is legendary. Some even get sponsored by them (get free access to all features). Like MacAdmins. But many don't. The problem is that the per-user model is really crap for public communities.
  - madeofpalk 4y ago
    Many use it in spite of Slack's attitude towards the free tier.
wpietri 4y ago
> If your loss-leading pricing strategy was unsustainable from the start, that’s on you. Yes, exactly. Companies can't tell consumers "it's free" and then be surprised people get upset when they change the terms. Do sufficiently sophisticated people know that free plans are always at risk? Yes. But clearly a pretty small percentage of people have fully internalized that, or there would be a lot fewer companies talking up their free plans in ways that suggest they're unlimited along important dimensions like time.
deleted 4y ago
[deleted]
prng2021 4y ago
sfvegandude 4y ago
soundnote 4y ago
> The latest Google Apps fiasco What did they do now?

by hnarn 4y ago

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
Not that the price will go down. Now they subsidize shareholders, which is quite worse in my book.
- PedroBatista 4y ago
  Same way my customers subsidize my dinner, I’m sure shareholders didn’t get in for free.
soraminazuki 4y ago
Most paying customers are businesses. Those businesses are definitely not going to be pleased because they have people who personally depend on Slack's free plan. So, they've probably pissed off a significant number of paying customers.
- chillfox 4y ago
  Yeah, people tend to forget that companies are just groups of people working together.
kzrdude 4y ago
But the company was built on that user growth. They were reporting the numbers to the investors and claiming "2.???; 3. Profit" all along. Especially now, with recession coming (interests rise => expectations of profitability increase), it's unfortunately suddenly important to show real profits.
- chrisseaton 4y ago
  > But the company was built on that user growth. Yeah… and now they’re grown to a size where everyone knows the product and they don’t need to get people interested from scratch in the same way.
- pid-1 4y ago
  If subsiding free users isn't attracting more paying customers, then slashing free tiers is a no brainer though.

digitalengineer 4y ago

Same with Evernote. Massive ‘growth’ on the free plan. No good way to capitalize, so they just started deleting features and locking people’s content in. There is no regular export to get everything out and you need to jump through a lot of hoops. I wish I never updated that app…

soheil 4y ago
Not to mention 1Password
- karamanolev 4y ago
  I wouldn't mention 1Password. It's a cornerstone for your digital security, if you're using it. As such, I don't want it free, I want to pay for it. My current family plan suits us very well and I'm very happy. Security is hard and I want it done right. Not to say that free tools are bad and paid tools are always good, but it certainly helps. I also do want "easy" things to be free, like a note-taking app.
  - joshspankit 4y ago
    I think OP is talking about how 1Password stopped letting you use the one-time-purchase version and pushed everyone to the subscription. Personally, I was pretty frustrated at that shift because I successfully and happily used old versions until it was “time” to update (2 then 4 (which was at the upgrade cost), then one more before I was pushed to the subscription). It always worked great. Tbh I’m still frustrated that their choice to self-host the syncing service became our costs (I used Dropbox just fine and that didn’t cost them anything), but now that I’m past the sticker shock (my costs easily went up 8X) I’m more comfortable with the stability of their company and breathing room they have to build the hard technology. Thanks for bringing it up: 1Password is a necessary example for this debate.
    - dasil003 4y ago
      I, too, have fond memories of the old one-time purchase modality of software vending, but I have to admit such an arrangement is largely untenable for any software company which wishes to maintain a high quality product across multiple platforms over the long haul. Regarding building in their own sync, I think it’s actually a good thing. Naively syncing encrypted files can’t achieve the reliability of conflict resolution that a semantically aware app-level sync can. On a side note, I moved away from Dropbox a couple years ago as their product became bloated as they seek growth with increased desperation. That is not a trait that I want in a company I allow to install kernel extensions on my machine.

mstipetic 4y ago

I think this should be outlawed. So many industries destroyed by cheap vc money, and then trying to raise prices once everyone else is gone. You can lose money doing research all you want, but the moment you start interacting with the market there should be a time limit until you can get your unit economics to work, or get out.

soheil 4y ago
So you're suggesting any startup that can't get its unit economics to work should have its founders sent to jail?
- mstipetic 4y ago
  Not too jail, where did I mention jail? Stop selling and messing up the market, just shut it down and go do something else that creates value
- mauvehaus 4y ago
  Under certain circumstances, the IRS will consider your business a hobby if it fails to make a profit. The consequence being that you may no longer write off your business expenses on your taxes.
  - kfarr 4y ago
    It’s a few years IIRC, something like 3-5 years
webmobdev 4y ago
I agree - "free" should be anti-competitive. Today it is incredibly hard for any startup to compete with the "free" products of BigTech. And that is why in this industry, getting acquired by them is the only really viable exit option available for many startups.
- bdlowery 4y ago
  This is why I’ll never use vscode.

dvfjsdhgfv 4y ago

> 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. This is part of the game: 1) work hard to make something popular by offering a part of it for free, 2) once enough people get hooked, start tightening the terms, 3) most people will be pissed off but your profit is from those who stay (because they invested too much to just migrate away).

voakbasda 4y ago
If those companies had a shred of integrity and respect for their customers, they would be upfront about such plans. Without a roadmap, user trust will eventually be shattered by step 2. Most people understand this shell game, and they will put up with it if they know what to expect.
- kennend3 4y ago
  I'm sorry, but are the plans not obvious? Companies are not some altruistic group, and this pattern of "free to get you hooked then convert to a paying customer" is almost as old as computing itself. What is odd here people depending on slack for search history and not creating a proper KB?

pid-1 4y ago

Does Slack even care if folks not planning to pay are pissed? My understanding is this sort of strategy wants to archive some sort of network effect so business (which actually pay for services) start adopting a product. It's meant to kickstart recurring revenue, not to last forever.

ajsnigrutin 4y ago
I mean.. it kinda does. If a small opensource dev group gets pissed at slack, and those people have a say in a chat solution at their workplace (paid plans there of course), pissed people won't recommend slack but other alternatives.
Kye 4y ago
The people who use Slack for their weekend DnD group are the same people who bring it into the companies they work for during the week and ultimately suggest a paid plan. That's the entire idea behind freemium: just because someone doesn't get their own credit card out doesn't mean they don't influence the person who does.
- pclmulqdq 4y ago
  That's exactly how I ended up having a paid slack subscription. It looks like discord is going to take over several companies exactly for this reason.
TheGeminon 4y ago
Don't know if it is their intention, but this is probably more of a cost-cutting measure than a revenue-increasing one (or maybe even a technical one, with their data strategy/partitioning it may be much easier to do everything time-based). Many people expect free things to stay the same forever, which obviously isn't realistic, but this is still going to have a damaging effect on their brand. As well with the free tier, there are a ton of OSS projects, community groups, etc. that will no longer be using Slack, and the network effects will drop substantially. This has been seen a bit with Discord, so maybe they are going all-in on dropping these types of customers. There can't be _that_ many people who are on the free plan that will now be migrating to paid with this change. If anything, it now incentivizes larger groups (which would generate more revenue) to use the free plan since data is gated by time, not by usage. A slack instance with a few thousand active users on the free plan was basically unusable, 10k messages can be eaten up rather quickly. Now if you only care about the last 90 days (which honestly, isn't a bad idea with Slack to not use it as permanent storage) you can have a much larger group on the free plan.

mmcnl 4y ago

I think if you are on a free tier and your business depends on it, you should anticipate for changes in said free tier. If you want guarantees, you need to be a paying customer.

paulgb 4y ago
I agree, but what's happening here is largely not businesses behind the exodus, but loose organizations like open source communities. You could argue that these are freeloaders and not Slack's problem, but I'd be wary about sending so many users running into the arms of their competition. Part of the appeal of Slack was that I could use one app for everything, which is increasingly not the case.

ghaff 4y ago

>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. I'd argue that most companies understand that perfectly well. They have a generous free tier to drive growth. Once that growth is attained and demand starts to level off, it's time to trim the resources devoted to free and force users (to greater or lesser degrees) to either start paying or go use someone else. There's great wailing and gnashing of teeth for some period of time on HN, Twitter, etc. but life moves on. It's a pretty predictable playbook. See also Heroku of late. It should probably also come as no surprise we're seeing a number of examples of this going on at the moment.

ryeights 4y ago
Note that Heroku and Slack are both owned by Salesforce.
- ghaff 4y ago
  True. So the timing is probably not entirely coincidental.
gdilla 4y ago
Yup, and they think pissing people off is worth it (for their expected benefit). And... they're probably right. People have short term memories and other things to worry about.
- madeofpalk 4y ago
  What's the cost of pissing free-tier people off? None of this has really impacted paying customers, right?
  - bombcar 4y ago
    Some percentage of free tier people are also paying on other accounts, and some will be lost. But it’s probably a small amount because SaaS has figured out to basically milk slacktivism. People will complain but pay.

webmobdev 4y ago

Very true. Reminds me of what Seth Godin wrote on how the internet has changed people's behaviour: > Most people, most of the time, don't buy things if there's a free substitute available. A hundred million people hear a pop song on the radio and less than 1 percent will buy a copy. Millions will walk by a painting in a museum, but very few have prints, posters or even inexpensive original art in their homes. (In the former case, the purchased music is better–quality and convenience–than the free version, in the latter, the print is merely more accessible, but the math is the same–lots of visits, not a lot of conversion). > We don't hesitate to ask a consultant or doctor or writer for free advice, but often hesitate when it involves a payment. ("Oh, I'm not asking for consulting, I just wanted you to answer a question…") And yes, I'm told that some people cut their own hair instead of paying someone a few bucks to do it. The bet a creator makes, then, is that when she gives away something for free, it will be discovered, attract attention, spread and then, as we saw in radio in 1969, lead to some portion of the masses actually buying something. What's easy to overlook is that a leap is necessary for the last step to occur. As we've made it easier for ideas to spread digitally, we've actually amplified the gap between free and paid. It turns out that there's a huge cohort that's just not going to pay for anything if they can possibly avoid it. > As the free-only cohort grows, people start to feel foolish when they pay for something when the free substitute is easily available and perhaps more convenient. Think about that–buying things now makes some people feel foolish. Few felt foolish buying a Creedence album in the 1970s. They felt good about it, not stupid. This new default to free means that people with something to sell are going to have to push ever harder to invent things that can't possibly have a free substitute. > Creators don't have to like it, but free culture is here and it's getting more pervasive. The brutal economics of discovery combined with no marginal cost create a relentless path toward free, which deepens the gap. Going forward, many things that can be free, will be. Source: The game theory of discovery and the birth of the free-gap - https://seths.blog/2011/06/discovery-free-145/ https://seths.blog/2011/06/discovery-free-145/

watwut 4y ago
One obvious difference is that hairdressers don't run around yelling "free haircuts we will give you free haircuts look at us how we give away free haircuts". What the companies are doing here is that they are trying to kill paid competition, hold on longer and raise prices once competitors don't exists. They really dont have a standing to complain about situation they themselves created in the hope that competition will die sooner and in the hope users will be locked too much without any chance. > Millions will walk by a painting in a museum, but very few have prints, posters or even inexpensive original art in their homes. Now, this analogy does not work at all, because going by the painting in the museum in no way implies you would want it at home. And that many people dont go to the museums in the first place ... and those who go are more likely to buy some serious art. The other reason it does not work is that people have tons of inexpensive art in their homes. It is ridiculously competitive market. Posters, cups bought only for their pictures, figurines, people buy all of that.

daniel-cussen 4y ago

That makes sense. It was a race to the bottom. Now we're at the bottom. It's like 2001 in a lot of ways. Spesh the terrible economics of websites, or apps, or call them almost whatever they want, platforms, anything. Giveaways bring users. Free beer people show up. Like there's no business here. No excludability. It was a prettification of IRC, which of course nobody pays one fuck of a cent for, and now they want to charge...well guess people will go to IRC directly. And maybe there'll be an FOSS prettification. And that'll be it.

TheFlyingFish 4y ago
>It was a prettification of IRC, which of course nobody pays one fuck of a cent for It's a lot more than that. Addimg a persistent message history and multi-device identities to IRC is pretty huge, otherwise bouncers would never have existed. And the number of paying customers shows that people are, in fact, very willing to pay for it. Slack just really sucks at b2b marketing, which is why Teams eclipsed them so quickly.
- redler 4y ago
  Regardless of their B2B marketing strategy, it's hard to compete with "this Slack-like thing is included with the mega-expensive Microsoft license your company already pays for every year, around which you've built a Microsoft-specific IT group".
- daniel-cussen 4y ago
  Well there's different market segments. Me on one market segment, I'm the guy (nice to meet you) basically the way a sow has a runt, on the off chance she can feed it, that's the same basis companies hire me. And only very fucked companies. The basic reason is because I got tortured with an amnestic lobotomy. I had a very marketable curriculum until that point, and after that if for instance I was asked where I worked during April 2009, I would ask "are we talking about the Gregorian Calendar, that shit?" So for me you have to provide amazing shit for me to subscribe to anything. And it can be done. Not often. I can't have 7000 apps draining me $5 a month. That is why I identified a natural limit to the number of web-app subscription-model startups there could be, the first limit was remembering all the credentials to use them, which 1Password and similar surpassed. One user here talked about having 800 web app username-password credentials on his 1Password, obviously doesn't pay any scratch for most of them. Veteran of the freemium model, like I became a veteran of the psych ward in my remarkably successful struggle under torture, including not caving to the torture. I talk about this at https://news.ycombinator.com/item?id=32620302 https://news.ycombinator.com/item?id=32620302 So my segment of the market, I'm gone. Neither feature you mentioned seems...wantable. And that goes for most web apps, like I predict their business model and then operate on that basis. So for instance most VPN's are, as a business, honeypots. Like yeah you can steal from the labels who steal music from the artists, that you can do, but for tricky nitty gritty, nah. It's just too obvious, it's just too instantaneous an erection the founder gets thinking of cutting deals with Kuwaiti Intelligence during the commercial of them going on TV saying "We never have and never will cut a deal with Kuwaiti Intelligence." So with the paying users it's like ice on land, they need the ice on the sea in order to hold them back from falling into the sea. Non-paying users provide a lot of value to Slack, in that for instance you can do a trial release on them to debug your product for the paying users. For example. "Slack just really sucks at b2b marketing" well compared to Microsoft yes. Slack sucks at marketing compared to Microsoft, for B2B. I buy that. The guy Butterfield (Stuart? Something) was busy getting on magazine covers like it is still the previous millennium, which for businesses loses credibility. So I went to slack.com and tried finding what they charged, they wanted me to see all their flair first. So I went to the URL which said https://slack.com/features https://slack.com/features and replaced "features" with "pricing" and there it was, the chart with the numbers they want. So they want $8.00 USD a month for their product, and assumptively propose you buy it for the year at a pro rata price of $6.67 as the default. I looked for their asterisk at the bottom of the page, but it wasn't there. No this was a javascript asterkisk, no relation to asterisks in eg legal document. So $8.00 a month, per user. So that right there is a turn-off to an informed buyer, which B2B is. There's typically a designated person in the office for this sort of purchase and she herds the company's users through the spam, the spear-fishing, the shitty deals like this one, every everything. Apparently Teams is in fact the better product, and that might be because the terms of service aren't demonic (though I vaguely recall them yes being demonic which is why I couldn't use it, but then from the dodginess in revealing the price I divine Slack's terms are demonic too). But whatever. In for a penny, in for a pound, sell your soul, no reason to pray. Microsoft already has telemetry on like blood type in the first 18 minutes so it's not an additional leak to work with them. And that's saying as someone conflicted about the company, I like the way they didn't fuck up github for instance. Didn't nix it. Like they never even bought it. It works better now, in fact, I can tell it has more integrity and reliability. Backend stuff.

rkangel 4y ago

> The latest Google Apps fiasco is a great example of this, where Google eventually had to backpedal due to the massive backlash. In what way have they back-pedalled? I'm affected by this and hadn't heard anything.

Terretta 4y ago
They delayed the cutover multiple times. They gave people 3 months free. They gave people a year at 1/2 off. And finally they gave anyone who declared themselves as personal/family use only back the free option, even after having migrated to a billed option. (And, if you’re affected by Ukraine vs. Russia, deferred indefinitely.)
- rkangel 4y ago
  I didn't know about the last option! They didn't exactly notify us about the option... I have now selected it, thanks!
  - bombcar 4y ago
    Yeah they were very good about announcing the paid version. The backpedal was quiet. https://support.google.com/a/answer/2855120?hl=en https://support.google.com/a/answer/2855120?hl=en For those watching at home, if you signed up to pay you may still be able to switch back.

kennend3 4y ago

> You’re trying to put the blame on the consumer here which never makes any sense from a business perspective. Consumer: noun 1. a person who purchases goods and services for personal use. It is sort of weird that people don't pay for a product, yet expect to be able to use it forever? It should be obvious that companies intend to convert "users" to "customers"? You call them "consumers" but they are not given the have not paid for the services. Maybe "users" is more appropriate? Do let us know what products you produce, and give away for free for years and dont want to monetize, it is just a charity thing for you even thought it costs you money to offer the service.

jonathanlb 4y ago
Users generally don't like surprises. As a user or consumer, it an unpleasant surprise that feels like a bait and switch when the free product you used now requires payment without prior warning. At least smaller apps are upfront about the duration of the free trial, and there are no surprises (or uproar) there.
- kube-system 4y ago
  If those people wouldn’t have purchased the product, does it matter that they’re pissed off?
  - atomicfiredoll 4y ago
    Who says they wouldn't have purchased the product? I've been hoping that Slack would provide communities like mine better plans or options to support them and access some of the improved features. But, this move makes it pretty clear they're never going to, so I'm finally going to bite the bullet and set up Matrix. [Just to add to this, I've had my users asking me why we're on Slack when everybody else is on Discord. (Most of us use Slack at work, so it's convenient in that sense.) I've been interacting with the company since Glitch/Tiny Speck. But, with pushback from users and from the company, at this point I just can't justify Slack for our particular use case.]

madeofpalk 4y ago

> if you promote your product through a loss leader To be fair, I don't think Slack ever actually did this. Slack has always been pretty terrible for semi-public communities, and I don't think they did anything to promote this. Free slack has always had pretty annoying retention and storage limits, and others like limits on how many integrations you can add. I think Slack's problem has been that reasonably (at least in the beginning before Discord got popular and copied all of Slacks features), people liked Slack from their experience at using it for work. Indeed, Slack's advantage has/had been in appealing to the hundreds/thousands of employees making something they would want to use.

GekkePrutser 4y ago
I know many public communities that use slack. A major one is MacAdmins which is legendary. Some even get sponsored by them (get free access to all features). Like MacAdmins. But many don't. The problem is that the per-user model is really crap for public communities.
- madeofpalk 4y ago
  Many use it in spite of Slack's attitude towards the free tier.

wpietri 4y ago

> If your loss-leading pricing strategy was unsustainable from the start, that’s on you. Yes, exactly. Companies can't tell consumers "it's free" and then be surprised people get upset when they change the terms. Do sufficiently sophisticated people know that free plans are always at risk? Yes. But clearly a pretty small percentage of people have fully internalized that, or there would be a lot fewer companies talking up their free plans in ways that suggest they're unlimited along important dimensions like time.

deleted 4y ago

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prng2021 4y ago

sfvegandude 4y ago

soundnote 4y ago

> The latest Google Apps fiasco What did they do now?