DROPBOX

Somerville - Team 2

Kehinde AdewunmiByungjin An

Michela CaltranLucia Lozano

Vladimir Martyanov

Agenda

Present Situation

Competitors

Main Issues

Pricing Strategy

Reasons for Success

Overall Benefits

Conclusion

Present Situation

Dropbox17%

Apple (including

iTunes)27%

Amazon15%

Google Drive10%

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

Competitors

$1009080706050

$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

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

Free

25 GB+

100 GB+

Unlimited

FreeUp 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.

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

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

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 / month100GB of Cloud Storage

Starting at $9.99/month

Premium

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

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

Sust

ain

able

Bra

nd

P

erc

ep

tio

n

Overall Benefits

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

THANK YOU