Dropbox pricing strategy
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In this presentation I discuss the particular implementation of the freemium subscription-based model in case of Dropbox.
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Dropbox pricing strategy
- 2. SOME INTERESTING FACTS* A billion files saved every 24 hours 100 million users In 2011 when its revenues were $250 million, it was valued by private investors at over $4 billion * – Information from Nov. 13, 2012
- 3. SOME INTERESTING FACTS* Dropbox uses Amazon web services Biggest challenge is to scale in terms of organization and to move from one coreproduct to many * – Information from Nov. 13, 2012
- 4. WITH THE ANNUAL REVENUE OF AROUND $500 MILLION, WHAT IS THE PERCENTAGE OF PAYING USERS DROPBOX HAS? 4%
- 5. PRICING
- 6. FREE PLAN 2 GB space for free. From Dropbox pricing terms: If a free account is inactive for 90 days, then Dropbox may delete any or all of your files without providing any additional notice 500 MB per referral (invite friend), but not more than 18 GB – Dropbox outsources promotion.
- 7. WHY DROPBOX DOESN’T PUT A LIMIT TO THE NUMBER OF DEVICES FOR FREE PLAN? 1. WHEN THEY STARTED AND DEVELOPED THEIR PRICING STRATEGY, THERE WERE NO IPHONES, IPADS ETC. 2. IT VIOLATES THEIR STRATEGY
- 8. PRO PLAN The only difference from Free plan is increased capacity (not mentioning that no one has a right to delete your documents). Fixed plans: • 100 GB • 200 GB • 500 GB 3 options, perhaps, not to frustrate users with too many of options (can you say, what capacity do you need – 200 GB or 240 GB?).
- 9. BUSINESS PLAN Starts from 1 TB for 5 users. Main differences from Pro plan: • Centralized administration • SSO (Single Sign-on) • Centralized billing Is used by Foursquare, Kayak, Rockstar energy drinks. Interesting fact is that user can’t buy 1 TB within Pro plan. If there was such an opportunity, the value of centralized administration, SSO etc. would have been clear.
- 10. USER STORY Free, 2GB Needs more space Invites friends Free, 18GB Gets used to it Pro, 100GB Needs even more space Needs even more space Encourages his managers To use Dropbox within the company Business Pro, 200GB Needs even more space Manager needs an easy tool for collaboration within the company Pro, 500GB Interesting fact is that user can’t buy 1 TB within Pro plan. If there was such an opportunity, the value of centralized administration, SSO etc. would have been clear.
- 11. STATISTICS 125$ 120$* Average payment annually from paying customer (2012) 500$* Upon request** * – prices for monthly billing. Billing annually saves about 17%. ** – prices for business plan are not mentioned. Obviously, they are higher.