Dropbox currently has 200 million users, but only 1.6% are paid subscribers. To address this, the document proposes a new pricing strategy with multiple tiers: 1) a 1GB free tier, 2) a 25GB "Pro" tier for $3.99/month, and 3) a 100GB "Premium" tier for $9.99/month. It also recommends maintaining Dropbox's referral program which provides storage bonuses to both referrers and receivers. The goals are to increase conversion rates, broaden Dropbox's offerings to different customer segments, and emphasize its benefits over competitors like higher quality service and data security.

1. DROPBOX
Somerville - Team 2
Kehinde Adewunmi
Byungjin An
Michela Caltran
Lucia Lozano
Vladimir Martyanov

2. Agenda
Present Situation
Competitors
Main Issues
Pricing Strategy
Reasons for Success
Overall Benefits
Conclusion

3. Present Situation
Dropbox
17%
Apple
(including
iTunes)
27%
Amazon
15%
Google Drive
10%
All others
combined
14%
Market Share
Users: 200 Million
• 98% Unpaid - 196M
• 1.6% Paid - 3.2M
• 0.15% Business - 300K
Free Account
Premium Account
$99.9/year
$9.99/month
$19.99/month
Referral Program:
500 MB of additional free space for
referrer and receiver, up to 16GB per
referring account.
2GB
50 GB
100 GB

4. Competitors
$100
90
80
70
60
50
$40
$30
20
$10
0
20 25 27 50
GB GB GB GB
Products Ratio
Google Drive $1.2/GB
Apple iCloud $2/GB
Microsoft SkyDrive $0.37/GB
DropBox $2/GB

5. Main Issues
Low Conversion Rate: 1.6% of Total Users
Total Cost of servicing a Free Customer: $49/year
for using 16GB of space
Competition is offering a similar service for a lower
price

6. Free
25 GB+
100 GB+
Unlimited
Free
Up to 25 GB
(1GB + 1GB per Referral)
Pro
$3.99/month or $39.99/year
Premium
$9.99/month or $99.99/year
Business
$800/year per 5 users
Pricing Strategy
 Product Line Pricing
Strategy to target
different target
segments.
 Reduction of free
storage space to reach
a higher conversion for
premium packages.
 Free Trial for a limited
period of time.

7. Free Account
Up to 25 GB
[1GB + 1GB per Referral]
Offering
 1GB of Cloud Space
 Accessible only by PC users
 Limited sharing features
Referral Promotion
 25GB per 1 year
[After 1 year, the user will have the choice to upgrade
and keep the additional storage space or go back to the
basic offer]
 Mobile Access
 Referrer receives 1GB/year per Referral, up to
25 GB

8. Pro Account
 Offering:
 25GB of Cloud Space
 Access to all platforms
 Mobile-PC sync
 Full sharing features
 Price:
 $39.99/year
 $3.99/month25GB of Cloud Storage
Starting at $3.99/month

9. Premium Account
 Offering
 100GB of Cloud Space
 Mobile and PC access
 Additional Features:
- Automatic Backup
- Customizable Archive by file type
- Premium Customer Service
 Price
 $99.99 / year
 $9.99 / month
100GB of Cloud Storage
Starting at $9.99/month
Premium

10. Reasons for Success
More
Options for
Premium
Packages
High Quality
Service with
Additional
Features
Established
Positive
Brand
Reputation
Differential
Value compared
to competitors
More Storage
Space at a
Competitive
Price
Reduced
Total Cost
per Free
Customer

11. Customer
Segmentation
+
Referrals
Product Line
Pricing
 Expanded offering portfolio
 Different offerings to different market
segments
 More suitable offerings according to
market segments
 Encourage trial purchases
 Encourage upgrading
Outcomes
 Maximize profits
 Maintain brand’s quality perception
SustainableBrand
Perception
Overall Benefits

12. Conclusion
DropBox is trapped in a model which produces low
conversion rate from free to paid service (1.6%).
We recommend implementing a Product Line
Pricing Model and target different market segments
by broadening the offerings to the target audience:
1GB freemium
25GB DropBox Pro
100GB DropBox Premium
We suggest maintaining the Referral Strategy, by
offering a storage bonus for a limited time, to
encourage our users promote our services.
As a result, the implementation of the strategy will
lead to the increase of:
Customer Base
Conversion Rate
In addition to the proposed activities, we suggest
emphasizing the brand’s benefits in comparison to
the competitors:
Higher service quality
Higher data security
Platform independency

13. THANK YOU