nav
Business Operations Business Models

How Does Slack Make Money (Business and Revenue Model)

The Slack business model

How Does Slack Make Money?
Here’s what you should know:
  • What is Slack, and how does Slack work?
  • How does Slack make money?
  • Subscription Service
  • Slack’s Subsidiaries, Acquisitions, and Exits
  • Slack’s profit and revenue
  • What is the Slack business and revenue model?
  • Slack’s funding and valuation

How does Slack make money? Here is a full, in-depth, breakdown of their revenue streams and different products and services they offer, as well as the Slack business model, their year-over-year revenue, and how Slack works.

What is Slack, and how does Slack work?

Slack is a real-time communication and collaboration software for teams that can also be integrated with more than 2,400 apps using the Slack API.

Originally developed in 2013 for the internal team at Tiny Speck, a video game company, to develop an online game called Glitch. The company later renamed itself Slack Technologies in August 2014 after the launch of Slack.

Slack has since gone on to make its IPO on April 26, 2019, and was later acquired by Salesforce on December 1, 2020, for $27.7 billion in cash and stock.

Slack App in Apple App Store | Slack Business Model | How Does Slack Make Money?
Source: Apple App Store

How does Slack make money?

Even though Slack offers a freemium tier, they have 169,000 paying customers. Of those customers are more than 1,200 of them paying out more than $100,000 a year for the service – and of those are 113 paying out $1 million or more.

So how does Slack make money off of those paying customers and what services do they offer them?

Below is a breakdown of how much money Slack makes and its revenue model. Including their main revenue stream and how much they charge for the service.

Here is how Slack makes money (in 2021):

Slack has a Software as a service (SaaS) revenue model that makes money solely through its subscription service.

#1. Subscription Service

Slack is a Software as a service (SaaS) company so it makes all of its money through monthly subscriptions for its service.

To date, Slack has more than 169,000 paying customers. Of those customers are more than 1,200 of them paying out more than $100,000 a year for the Slack software – and of those are 113 paying out $1 million or more. These high paying corporate clients are companies like Airbnb, Target, Oracle, Uber, and others.

Slack Subscription Cost:

  • Freemium tier: $0
  • Standard: $8 per month, per active user
  • Plus: $15 per month, per active user
  • Enterprise Grid: contact sales

Slack’s Subsidiaries, Acquisitions, and Exits

Aside from Slack being acquired by Salesforce for $27.7 billion, Slack has had its own fair share of acquisitions as well.

To date, Slack Technologies has made a total of 8 acquisitions. On top of that, Slack also had 24 investments, 8 lead investments, and 2 successful exits according to Crunchbase.

Crunchbase | Slack Acquisitions
Source Crunchbase

Slack‘s profit and revenue

In 2020, Slack reported $902 million in revenue. But even though they generated nearly $1 billion, Slack is still not profitable.

Dating back to their first public filings as a public company in FY 2019, they posted a net loss of $138.9 million and another $292.5 million in FY 2020.

Note: Because Slack Technologies, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Slack’s publicly released financial reports, including annual reports, through Slack’s investor section on their website.

What is the Slack business and revenue model?

Slack makes money through a few revenue models that they combine within their company, they are:

  • Freemium (upselling) business model
  • Software as a service (SaaS) business model

Slack‘s funding and valuation

According to Slack’s Crunchbase profile, Slack has raised $1.4 billion over 13 rounds and has a valuation of $25 billion, according to Yahoo and Google Finance.

On December 1, 2020, Salesforce acquired Slack for $27.7 billion in cash and stock.