This is a bit heretical but I suspect Dropbox would make more money if it moved away from a freemium model. I have been a user of the free Dropbox account for multiple years now and due to their various promotions have gotten my free storage up to 6GB and yet I use just under 4GB. I don’t use it to store images but instead use it to store important documents that I want to both keep safe but also frequently access across multiple devices. It’s unlikely I’m going to upgrade to a new plan. The only reason would be for photo storage but there are a ton of free or cheaper options.
I don’t know the details but I suspect there are a ton of customers just like me. We find Dropbox incredibly convenient but the free tier is good enough and we see no reason to pay. Yet if they did move to a paid-only product there would be some churn but I expect most of us would just pay to maintain our workflow. And once we had the additional space we’d find more use for it which would in turn make us hesitant to leave.
Freemium models use to be in vogue but maybe we’re past them. Dropbox needed the freemium model to grow quickly and make their presence known but at this point the majority of the tech literate must be aware of Dropbox. They are either using it or are not and a freemium model makes little sense when you’re at the point where everyone knows who you are.
Of course I know very little about their economics or actual reach so this is pure speculation but there is something to be said about starting with a freemium model and then abandoning it when you get huge. It will annoy the hell out of your customers but will likely result in more revenue and profit. The problem is if you go down this road it’s likely impossible to undo it since all the dropped freemium customers will feel betrayed and lose trust. It’s an interesting thought and was spurred by last week’s earnings report and the resulting stock price drop. It’s unlikely Dropbox will do anything to rock the boat but If the results continue to be disappointing this may end up happening.