Freemium pricing of dropbox
Huang Ge
MGT401
Prof. Patton, Joseph
2/3/2015
Case 2
1. Describe Dropbox’s “Freemium Pricing strategy” to get users and revenue. What was this strategy? What did the company hope to accomplish with this strategy?
Dropbox is a company providing remote-storage over the internet, cloud storage service as well. The “Freemium Pricing Strategy” is a popular pricing strategy which company provide client a basic service without paying a dime and premium services were paid. Dropbox offers 2GB cloud storage space for free and 1TB for $9.99 per month. The basic service attracts millions of customer to use and like it. On the other hand, the major revenue is generated by paid customers which weights 60% of total revenue.
Moreover, Drew Houston, the CEO and founder of Dropbox, introduced an incentivize mechanism to expand the market. Satisfied users are more willing to recommend Dropbox to their friends, family and co-worker, in turn, they can get free storage upgrade.
In corporate business, Dropbox provide paid “Dropbox for Business” which featured unlimited storage and administrative control. Corporate contribute 40% of Dropbox revenue for the effectiveness Dropbox provided. The freemium pricing and incentive mechanism accelerate Dropbox customer acquisition. Although 98% customers are unpaid and generate zero revenue, the significant amount of user base is potential wealth of Dropbox.
Dropbox was considered as one of the most successful companies to offer “Freemium Pricing” in cloud storage market. Freemium offers customers an opportunity to try out a new product or service risk-free and cost-free. Meanwhile, Dropbox achieved the objective, 200 million of user.
1. What were the positive results of this strategy?
With “Freemium Pricing”, Dropbox has 17% market share, and the second market dominator, beside Apple iCloud, which pre-programmed inside consumer hardware such as iPhone, iPad and laptop. Even several internet giants began vying a piece of promising cloud
MGT401
Prof. Patton, Joseph
2/3/2015
Case 2
1. Describe Dropbox’s “Freemium Pricing strategy” to get users and revenue. What was this strategy? What did the company hope to accomplish with this strategy?
Dropbox is a company providing remote-storage over the internet, cloud storage service as well. The “Freemium Pricing Strategy” is a popular pricing strategy which company provide client a basic service without paying a dime and premium services were paid. Dropbox offers 2GB cloud storage space for free and 1TB for $9.99 per month. The basic service attracts millions of customer to use and like it. On the other hand, the major revenue is generated by paid customers which weights 60% of total revenue.
Moreover, Drew Houston, the CEO and founder of Dropbox, introduced an incentivize mechanism to expand the market. Satisfied users are more willing to recommend Dropbox to their friends, family and co-worker, in turn, they can get free storage upgrade.
In corporate business, Dropbox provide paid “Dropbox for Business” which featured unlimited storage and administrative control. Corporate contribute 40% of Dropbox revenue for the effectiveness Dropbox provided. The freemium pricing and incentive mechanism accelerate Dropbox customer acquisition. Although 98% customers are unpaid and generate zero revenue, the significant amount of user base is potential wealth of Dropbox.
Dropbox was considered as one of the most successful companies to offer “Freemium Pricing” in cloud storage market. Freemium offers customers an opportunity to try out a new product or service risk-free and cost-free. Meanwhile, Dropbox achieved the objective, 200 million of user.
1. What were the positive results of this strategy?
With “Freemium Pricing”, Dropbox has 17% market share, and the second market dominator, beside Apple iCloud, which pre-programmed inside consumer hardware such as iPhone, iPad and laptop. Even several internet giants began vying a piece of promising cloud