Case | HBS Case Collection | November 2013

Freemium Pricing at Dropbox

by Thales Teixeira and Elizabeth Anne Watkins

Abstract

Online storage company Dropbox provided remote-storage over the internet of any type of computer file, along with file sharing, synchronization and backup. Using a freemium pricing strategy whereby a basic service was free-of-charge and a premium service was paid, Dropbox grew into a business with 200 million users. But only an estimated 1.6 to 4.0% of its users provided any revenue to the company. This case examines how Dropbox used freemium pricing to facilitate product adoption and user referrals. A survey is provided of the cloud-storage industry, including an overview of the largest players and their pricing/service models. Further, various freemium-based companies across industries are compared, including user conversion rates and revenue profiles.

Keywords: Marketing Strategy; Price; Internet; Information Technology Industry;

Citation:

Teixeira, Thales, and Elizabeth Anne Watkins. "Freemium Pricing at Dropbox." Harvard Business School Case 514-053, November 2013.