Case Study Example | Topics and Well Written Essays - 750 words - 28

Case Study Example With the Freemium Pricing Strategy in place, it was obvious that the company’s user base would definitely increase. The strategy worked effectively in that Dropbox managed to grow from at least 4 million Dropbox users in January 2010 to more than 200 million users by November 2 years later. In as much as the company never revealed its exact revenues, it was reported by an industry analysts that the company made more than $400 million by 2012. Five years after it was launched, it can be reported that Dropbox was valued at more than 4 billion dollars. This means that the company benefited from the strategy. Alternatively, the company managed to secure a large share of Dropbox users especially for the cloud storage. This therefore enabled the company management to switch its attention to corporate customers. First, the strategy led to overcrowding with minimal competitors. Alternatively, getting users was somehow tough because of bureaucratic delays especially in making them integrate the services. There is also the notion that the freemium strategy would end being a costly affair for the company. It was feared that the strategy would leave the company with thousands of freeloaders and higher operating costs. It was also difficult to get individuals pay since most mainstream users were not used to paying for the services. Another challenge of this strategy is that the company might suffer from value perception of the services. The fact that the basic package is free, most users might have the perception that any other version that company offers has little value. Lastly, issues with competition are common. After the success of the freemium strategy, Houston started to target the corporate customers directly. Whereas the consumer Dropbox version started at only $120 per year, the business type was estimated to cost more than $800 on a yearly basis for users. Termed as the Dropbox for Business version, the strategy featured