Slack Business Model – How does Slack make money

Whether you’re running a small business or large enterprise, communication is the key to your business. It’s important to communicate with your team and clients to ensure your business achieve goals. On the other hand, effective communication is important within the organization. Good communication will help to encourage a positive relationship between an employee and an employer. This can improve employee work efficiency. If you’re a tech gig then you might surely know about Slack.


It all started in the year 2013!!! Stewart Butterfield is a professional software developer who designed Glitch online game. While working on the application, he realized the importance of having effective communication within the organization. This incident had led to the introduction of Slack. The tool is a powerful communication tool that is meant to handle and manage teams within the organization.

Introduction to Slack

Slack stands for “Searchable Log of All Conversation and Knowledge”. The application works like a chat room for internal communication. Therefore the team don’t need to waste their time on submitting the email. It’s no surprise email is the primary way to communicate and share important files, email is replaced by Slack. There are times where email doesn’t support large files. At that time, Slack is the best way to get your things done.

Slack is a popular collaboration hub!!! Here team can together communicate in a flexible way and complete task. Whether the team size is 10 or 100, they can effectively communicate within a single platform – Slack.

Many established organizations such as Microsoft and Windows use Slack for communication. Also, many businesses got subscribed to Slack. These businesses have noticed that Slack is the best tool for communication within hassles. This has resulted in Slack application raid growth within a short period.

How does Slack work?

Slack is an outstanding messaging tool that allows a business to collaborate with their team through “chat, phone, audio or video”. Users can communicate according to their requirement. They can communicate individually or in groups. Team members can create a group and exchange information while working on the projects.

Slack is available for desktop and mobile users. The aim of Slack is to help an organization communicate effectively across all the departments. Communication channels can be used for various purposes, a team can interact with their co-workers, share office location or send important files to other teams. All the conversations are stored in a Slack, the team can search for interaction anytime within a few simple clicks.

The principal of Slack is simple and straightforward “It brings collaboration at fingertips”.

Organized conversations

The interactions and communication flow in channels at Slack. User can create multiple channels according to their requirement. Here the channels can be created according to the size of the team members and projects that they’re working on. Creating a separate channel for individual projects is the best way to keep everything organized.

Trackable history

Everything is tracked at Slack application. Yes, you’ve heard it right. Slack will track everything i.e conversations, projects and more. Also, employer or team member can go back to check the previous conversation done in the channel. The information uploaded on the Slack application can be used for future reference.

Secure working environment

Business worries about their security while communication. Slack provides assured security and pushes away the worries. The application goes through two-factor authentication. Slack can be handled by authorized persons only. Therefore all the information and interactions are safe and secured under the hands of Slack.


Slack provides a handful of integration to perform the processes even simpler. The integration set offered by Slack is making it stand out from the crowd. There are popular integrations is inbuild in Slack application such as Google Drive, Twitter, Dropbox and more.

Slack business model

Slack is an excellent way to communicate. Users can easily share files and communicate through video calls. Also, connecting to other application is simple and easy with Slack. 

Slack communication tool advertises itself as “Free to Use” software. Yes, you’ve heard it right. Slack follows “freemium business model“. Companies use Slack free version at initial stages. Once they’re satisfied with the Slack application, they can convert themselves as paying user. The premium plan offers advanced functionalities for business.

Over 750,000 business use Slack as their communication tool. Among them, more than 500,000 companies on the free version and upto 575 business are paying $100,000 every year for using advanced features offered by Slack in 2019. According to a recent analysis, Slack revenue has reached $630.4 million in 2020. It means the revenue has increased to more than 57% in 2020.

Recent Business Highlights

  • More than 110,000 are paid customers in 2020
  • Upto 25% growth year over year
  • Among the customers, more than 110,000 customers, 839 pay more than $10,000 every year
  • 70 customers pay more than $1 million every year

How does Slack make money?

Slack is the popular Saas communication application that allows the business to interact with each other either individually or in groups. As already mentioned, Slack offers a free version and premium subscription plan to small, medium and large enterprises. Let’s discuss how does Slack is earning money and shining like the star in the market.

Slack is offering four plan to make teamwork more productive. Let’s discuss them


The free plan is perfect for a small team who have limited projects. Users don’t need to pay a single penny to use Slack free version. Users can access to 10,000 recent messages. The plan offers 10 integrations such as Google Drive, Office 365, etc. Also, the video call feature between team members.


The Slack standard plan is suitable for small and medium scale business. The standard pricing plan starts at $US 2.67 per month. Apart from free version benefits, users can get advanced benefits in Standard plan. Teammates can check history anytime and get access to ultimate integration. Conduct voice call with more than 15 team members.


If you’re running a large organization and looking for extra administration requirement, Plus is the perfect choice for you. Slack Plus plan to start at $US 5 per month. The plan includes amazing features such as 24X7 customer support, data exports, custom messages, security, 99.9% uptime and more.

Enterprise Grid

Enterprise Grid is the one-stop solution for the extra-large organization. Slack enterprise grid is offering eye-catching features for organizations. It includes large scale collaborations, a business can connect upto 500,000 teammates, streamline administration activities, tailored support and more. If you’re looking for Slack enterprise grid pricing, contact the sales team.

Who are Slack’s paid customers?

There are four key paid customers for Slack such as

  • Individual business owners
  • Freelancers
  • Large organizations
  • Multinational companies

Companies on Slack are of various sizes. The users are working around the globe from various industries. Slack is the best option for all type of industries such as technology, finance, health, rental service and more.

Following are the number of paid customers of Slack

  • 2017 – 37,000
  • 2018 – 59,000
  • 2019 – 88,000
  • 2020 – 110,000

It’s clear that every year Slack paid customers are increasing.

Is Slack sustainable?

It’s a well-known fact that Slack has gained massive popularity from the past few years. With flexible and amazing functionality, Slack has stood as an effective communication tool for business. With the flexible working environment, high-security, sending large files, ease interaction and more. Slack unlimited integrations are helping teammates to increase their work productivity.

Every coin will have two faces, Slack has few dark shades as well. There are few cons for Slack, let’s discuss them,

As already discussed, Slack has an effective channels to communicate internally. For a non-tech-savvy, working with Slack and communicating in the chat room can be difficult task. Slack has few functionalities when compared to other communication tools. Yet, the application perform perfect as it can.

The annual income of Slack has reached to more than $630 million in 2020. Though it’s earning good profits, the biggest issue is the operational cost. Yes, it’s true. Slack operating cost is pretty expensive, it’s around 49% on annual revenue. This might raise question on Slack sustainability. Since the organization spend maximum percentage of it’s income on sales and marketing. Therefore it can be difficult to say that Slack will run profits in the future.


Without proper communication, no business can reach its goals. Slack understands the importance of communication, therefore it has introduced the best communication tool to help business. The slack tool was introduced in 2013. Slack is making good profits every year. As the communication tool is offering 4 plans such as free, standard, plus and enterprise grid. Apart from the free plan, Slack is charging for other plans. These plans are offering advanced functionalities. The company has is more than 110,000 customers. The popular paid customers are individual business entrepreneur, freelancers, large organizations and multinational companies. The annual turnover has reached $630 million in 2020.

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