Freemium pricing of Dropbox Essay

1. Describe Dropboxs Freemium determine strategy to come wasting diseasers and taxation. What was this strategy? What did the lodge hope to accomplish with this strategy? Dropbox is a order providing remote-storage over the internet, cloud storage service as well. The Freemium Pricing Strategy is a popular toll strategy which comp some(prenominal) provide client a basic service without paying a dime bag and premium services were paid. Dropbox oblations 2GB cloud storage aloofness for forfeit and 1TB for $9.99 per month. The basic service attracts millions of customer to use and like it. On the otherwise hand, the major tax is generated by paid customers which weights 60% of total revenue. Moreover, move Houston, the CEO and founder of Dropbox, introduced an incentivize mechanism to complicate the market. satisfy users atomic number 18 lots leaveing to recommend Dropbox to their friends, family and co-worker, in turn, they can fuss free storage upgrade.In merged billet, Dropbox provide paid Dropbox for Business which feature unlimited storage and administrative control. Corporate brook 40% of Dropbox revenue for the effectiveness Dropbox provided. The freemium pricing and bonus mechanism accelerate Dropbox customer acquisition. Although 98% customers are unpaid and generate zero revenue, the significant sum 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 chasten out a saucy product or service risk-free and cost-free. Meanwhile, Dropbox achieved the objective, 200 million of user. 1. What were the unconditional results of this strategy?With Freemium Pricing, Dropbox has 17% market share, and the chip market dominator, beside apple iCloud, which pre-programmed inside consumer hardware much(prenominal) as iPhone, iPad and laptop. Even several internet giants began vying a piece of p romising cloud storage market, Dropbox was calm possessing the second big vendor in the market.In short-term, Freemium Pricing speed up Dropbox user grew from 4 million to 200 million in quartette years and generate $400 million revenue by 2012. As well, in long-term, Dropbox builds brand find out and cultivates customer habit. With huge potentials, Dropbox is treasured at over 4 billion dollars. 2. What were the disconfirming results or failures of this strategy, if any? The competition of cloud storage market is genuinely intense, which makes Dropbox profitability less sustainable. Consumers may saturnine into other giant vendor such as Google, Apple and Amazon. Freemium Pricing and incentivize mechanism bring some negative influence on Dropbox. Customer prefer to get to a greater extent storage with recommend to friends and their friend al disordered for do the same thing to get free upgrade by doing the same thing. This will subjoin Dropbox operation cost by purchasing more than servers and maintain them. For venture capital investor, great capriciousness of future revenue means high risk. The value of Dropbox may be overestimated. Low user spiritual rebirth rate, loss of customers and make people always privation use Dropbox for free will be private risk for Dropbox.3. What was the strategy that Dropbox used for corporate/business customers? Describe this strategy and its results. Firstly, Dropbox was applying the Freemium Pricing Strategy to wear basic users. According to Drew Houston, his goal was to get individuals to use and like it so much that they, in turn, got their employers to sign up as well. Dropbox was offering a product that people didnt know that requisite until they tried. Free trial gives everyone a chance to try and experience the convenience and efficiency Dropbox brings to them. Secondly, Houston built an fillip strategy to stimulate the referral process Users benefit from acquiring more free storage and Houston get mo re customers. The referral hierarchy and accelerate the promotion of Dropbox.The quick expand of user create more chance that users will bring Dropbox to their workplace. After that, Dropbox holding a intumescent share of the consumer cloud storage market. Internet giants stepped into the market, Houston turned his sight on corporate users. Dropbox termed corporate var. Dropbox for Business which including unlimited storage space and administrative control. File sharing and co-working are become more efficiently than before. Finally, Dropbox achieved another success in corporate users whom become the secondary revenue stream weight down 40% of total revenue.4. What other strategies can you appreciate of that Dropbox could have chosen, instead ofFreemium Pricing? According to news, Dropbox is bout its direction into Big Data analysis. Diversity in product is necessary for Dropbox to develop a new stream of revenue. Freemium Pricing costs too much time and budget on customer cult ivating, in exchange, high uncertainty and risk are lethal disadvantage of Dropbox. Alternatively, Dropbox could use penetration pricing strategy. They offer the basic service with lowest price and win enough consumers to gain the market share. The difference amid penetration pricing and Freemium is the cost of customer maintaining is low but they may loss more users when the price raised.