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The average data stored free users capacity 433 MB at storage price 0.11 $ and paying users
capacity 25 GB at storage price 3.18 $.
40, 00,000*2%=80,000 and 40, 00,000*3%=1, 20,000, so considering average we get 1, 00,000
INR.
Revenue was approximately 10 million to 15 million thus considering the average we get 12.5
million.
Revenue per customer 12,500,000/1, 00,000=125 USD revenue per customer
Number of free customers 40,00,000-1,00,000= 39,00,000, Cost for free users
39,00,000*0.11=4,29,000 and for paid users 1,00,000*3.18= 3,18,000 cost for paid users.
Overall cost= 4, 29,000+3, 18,000= 7, 47,000 USD.
Net income 1, 25, 00,000-7, 47,000=1, 17, 53,000
Targeting the right customers was another master stroke by Dropbox, refer a friend which was
almost 35% signup of new customers. Another key element was the release of a single version
for all users, targeted specifically at individuals. This allowed the company to expand by a
Trojan horse strategy of targeting users to then enter into the B2B market automatically. This
strategy could also have been supported by AdWords and partnerships with big distribution
channels.
The revenue generation of Dropbox was totally based on the freemium model, customers can
use the basic service for free and later on they can upgrade for a fee. There are Pro plans which
come with larger storage space for 9.99 USD which is around 120 USD a year.
4) Imagine that at the time Dropbox was founded, Google decided to target
the same opportunity that Houston had identified. How would Googles
approach to G-Drive have been different from the approach that the
Dropbox team followed?
Google came up with similar kind of strategy, which offered free storage space but in case of
premium Google offered at a completive price than Drop box. For example customer who has
100GB plan with Google and Drop box, customer used to pay 1.99 $ a month compared to 9.99
$ a month for Dropbox.
This is best way to compete with Dropbox, with lower price customer would tend to use the
lower price based product for the same kind of service Google has both the capital and the
design team which can disrupt the Dropbox business model. Google could have increased the
free data space and with their superior design team and market share they can come up with
new features which similar to how Dropbox had created.
But Dropbox came with an aggressive strategy of giving 1 TB space for 10$ because now price is
factor which would attract the customers.