Sorry but yor math is wrong from the beginning!

If you like the food and service, you pay the asked price for the food and service, or you go else where.ĭropbox has never been the cheapest option.ĭropbox has never had the best feature set. If you don't think its worth it, you go else where. It doesn't have to offer dishes which are less than $200 a pop. To use your restaurant example, there are high class restaurants, there are low class restaurants and there are medium class restaurants - a high class restaurant does not have to cater to the same clientèle as the medium or low class restaurant. You really aren't the first to try and use the 'but you lose more service than you gain by not having smaller accounts' argument, but in reality it doesn't pan out - Dropbox is financially healthy and growing based on the current plans it has, its in no need to change its pricing strategies, and previous trials have shown that if it did change its pricing strategy then it would result in an up hill struggle just to get back to square one revenue wise. The math just doesn't add up for Dropbox. Which means that to off set the revenue stream for those 5 upgrades, you need something like 18 - 20 to offset one downgrade. And thats assuming those four users do not use their account at all, and thus incur Dropbox no costs. So how many upgrades would you need from a source which does not include current 1TB Pro account holders to off set the lost revenue of one single 1TB Pro account holder downgrading? Four. The lost revenue alone is more than the entire revenue stream for those 10 users. Well, you have your $300 revenue from the 10 upgrades.īut those 5 1TB Pro users would result in a lost revenue of $350. So, what situation do we find ourselves in if 5 of your 10 100GB upgrades actually come from what were 1TB Pro users. And that's assuming of course that those 100GB upgrades have no costs associated with them, which they do, so its a lot worse than that. Dropbox just lost $70 in revenue, with no reduction in costs for that user, its pure profit disappearing.Īll of a sudden that cuts down your $200 additional revenue stream from the 100GB upgrades to $130 because those upgrades have to replace that lost $70 in revenue. Ok, what if that 1 Pro user at $99 downgrades to the 100GB package at $30 because they don't actually need 1TB of space. Yet again we have a misunderstanding about the basic math involved.

Dropbox pricing strategy