Dropbox – Pricing and Distribution Strategy

Dropbox is a Web-based file hosting service operated by Dropbox, Inc. that uses cloud storage to enable users to store and share files and folders with others across the Internet using file synchronization. It was founded in 2007 by MIT graduates Drew Houston and Arash Ferdowsi as a Y Combinator startup. There are both free and paid services, each with varying options.

Dropbox uses the freemium financial model and its free service provides 2 GB of free online storage. Users who refer Dropbox to others can gain up to 18 GB of additional free storage. Dropbox offers paid accounts of 100 GB, 200 GB, 500 GB and a team account of 1 TB. The free account and the paid account are identical in all aspects except for the amount of storage space offered. Pricing varies from $9.99/month or $99/year for the cheapest upgrade (100 GB) to $795/year for the Enterprise offering – Dropbox for Teams. Dropbox also offers a value added service for unlimited versioning history called “PackRat” for $39/year.

Dropbox seems to have grown entirely through viral distribution strategy. It grew from a software startup with fewer than 100,000 users to more than 4 million users in fewer than two years. All of this by spending no money on advertising and having no prior marketing experience. This is not a fun social facebook app, but a boring online storage service. The trick is how they’ve grafted a viral distribution method onto a core service. Here’s the pitch : Get Extra Space Free – “For every friend who joins Dropbox, we’ll give you both 250 MB of bonus space.”

The company initially tried to use search marketing by bidding for obvious keywords like “online storage”. But they found that the keywords were bid up, and the long tail of search terms had low volume. This resulted in very high cost of acquisition per paid user and the company decided to focus entirely on word-of-mouth. They started a referral program that offered customers incentives to recommend the application to others. This one simple change permanently increased new users by 60%. Additionally, Dropbox made changes to their product that made it easier for users to share their love for Dropbox with others. For example, of shared folders allows one folder of documents to be shared with multiple users, thus encouraging users to invite others to share access to folders.

Dim Sum Warrior Distribution Channel and Pricing Strategy

Dim Sum Warriors is an educational digital comic book series for iPad that allows readers to learn Mandarin Chinese and English. First launched in October, 2012, Dim Sum Warriors is a critically-acclaimed iPad comic as well as educational application. With extensive experience in the fields of comics, filmmaking and education, founders of the app design a revolutionary  language learning approach and provide a real-life, interesting and conversational context for language learners.

As an interactive bilingual application, Dim Sum Warriors is designed to help readers learn languages in an innovative, effective and fun way. The teaching method of the application is pretty simple: it appears as a traditional comic book, but when readers tap on the word balloon, they can hear the audio of the conversation; if readers want to hear it in Chinese, they just tap and hold to see the translation and transliteration, and then tap the translation box to hear Chinese audio.

Dim Sum Warriors has also been distributed in the forms of hard print and eBook, but these forms strip the innovative aspect of the product, which is its unique teaching method. The app is specifically designed for iPad, hence the market for the educational app is relatively limited and the distribution channel is unitary. To expand the app’s target market as well as increase its distribution channels, development of a multi-platform application would be effective, and allows it to enter the broad android market.

The business model of Dim Sum Warrior is basically to charge a fee for each issuance of the comic series; its website also sells commodities, like t-shirt, as a source of revenue. The app applies the free trial model in terms of pricing strategy. It is free to download the application from AppleStore. And once people download the app and start to read, they can have the first and second issue for free, but after that there will be a $2.99 fee for each more issues. There is usually huge difference in numbers of download between free apps and those are not. Users will be more likely to adopt the free version. Once they familiarize themselves with the application and grow accustomed to the benefits of the app, they will be more willing to pay for the upcoming issues.  To build a loyal reader base and receive high ratings in the App Store, Dim Sum Warrior perhaps has to give out more free issues to get people hook up. But after that, it can expand its market and continue to charge for fees. This is a pretty effective model and should work out well for technology start-ups like Dim Sum Warriors.

By Hui Ge

Kashflow Pricing Strategy

KashFlow Software Limited is a privately owned company based in London, England. Kashflow provides online accounting software for small businesses owners  – the emphasis always being on ease of use, automation and integration.

Kashflow has a unique pricing model for their accounting software. They are targeting small businesses with their software so they have a desire to keep their service very affordable for those businesses with a very simple pricing model. They use a subscription based method of pricing charging 18 pounds every month. There is no tiered pricing plan and the 18 pounds gives the customer unlimited use with no restrictions. This provides an incredibly simple plan for small business owners and also some peace of mind that no matter how large their business might become they will be able to use the same service for the same price. Kashflow also provides free support and upgrades to the user as long as they are a subscriber. They also have a 14 day trial period so users can try out the product before making the purchase.

Kashflow’s pricing structure is an interesting model. It appears that they understand their target customers need for a simple service with a simple pricing plan and they have gone after that approach with a simple monthly fee that provides unlimited service for all customers. The simple pricing model that Kashflow uses may not include some of the more complex pricing strategies we often see, but for the goals of their service the pricing plan seems to fit the mold of what their customers are more likely to want.

 

Basecamp Pricing Strategy and Distribution Channel

Basecamp is an app developer startup with the focus on the project management and group emailing services. Currently, it has two products; one is a project management app, which provides project management interface and enables users to keep track of project discussions, files, and events from beginning to end—all in one place. Another product is the group emailing app. It provides the service of creating a single email address for all the team members.

The Project Management App:

This app was only for business in the past, but it also provides features for the personal projects as well.

The feature of its pricing strategy is by the number of project, which is very straightforward. As shown in its pricing page, it writes “Pay as you go. No long-term contracts. No per-user fees.” It has 4 levels of pricing. $20 per month for 10 projects; $50 dollars for 40 projects; $100 per month for 100 projects and $150 dollars for unlimited projects. For the business users, people would be more likely to purchase 40+ projects per month. However, most of the users especially for those who use it as personal project management would like to choose the 60-day free trial. After 60 days trial, they would turn into the entry level payers. There is great possibility that those personal users would persuade their companies to use Basecamp for business as well once they got favorable user experience.

The Group Email App:

Another app Basecamp has is the Basecamp Breeze, which is the group email address service. A group of people can have one email address for communication and discussion. It is just $10 per email address. Pay once and use the list with up to 50 members forever. This pricing strategy follows the same with the strategy of project management app, which is no per-user fees and per email address based. The pricing is affordable, clear and very easily understood by users.

Basecamp has various distribution channels. For the project management app, Basecamp launched several versions on Apple store, Android market, and windows shop. It also customized different features into different apps. However, for the group emailing app, Basecamp hasn’t launched its app in the app market. It is pretty possible that it will expand the platform into Android, Windows, and App version.

Haiku Deck-Pricing strategy

Haiku Deck is a free presentation application on iPad. Its value proposition is to provide customers a simple and fun way to create stunning presentations, and make storytelling a much richer experience for both the author and the viewer.

Haiku Deck is ranked No.159 on GeekWire 200 list. The company was previously Giant Thinkwell, a next-generation entertainment platform for celebrities to build, engage with, and have more fun with fans online. After two failed products, Haiku Deck was launched  in mid-August of 2011.

Users can start creating a Haiku Deck presentation by entering a few words of text; the application then suggests matching graphics from   a database of over 35 million Creative Commons images, allows customers to easily input their own photos and charts from iPad or social media platforms like Flickr and Facebook; the final step is to select an appropriate text layout and a theme to change the font and filter for the entire presentation. Created in only a few minutes, the final product can be either shared on social media, or exported to Microsoft’s PowerPoint or Apple’s Keynote.  Customers can use Haiku Deck to pitch an idea, summarize a discussion, teach a lesson, and showcase your plan etc.

Haiku Deck’ s pricing model is “Transaction”. Its pricing strategy is “Get your hooks in / Foot in the Door”. Once the customers get used to Haiku Deck’s presentation style, they can’t be displaced.

The application is free and users are free to use five themes including stylized fonts and filters for your PPT. It’s the best option for a new application to reach out and engage more potential users. The free version will give users the opportunity to test whether Haiku Deck satisfies their need for PPT creation, and build a large fan base and positive reviews, which not only cultivate the user loyalty but also bolster sales of in-app purchase. Additional themes are available for $1.99 each via in-app purchases. “It’s an initial way to monetize”, said the Adam Tratt, CEO of Haiku Deck.  The other revenue options could be “premium photography and other premium features.”

In Decemeber 2012, Haiku Deck partnered with Slideshare, the world’s largest community for sharing presentation with 60 million monthly visitors and 130 million pageviews. Haiku’s CEO Adam Tratt emphasized the value for the partnership: millions of slideshare users are always looking for new ways to create compelling ideas/stories. In other words, Haiku Deck provides a simple and fashion way to make PPT for Slideshares’ customers, while Slideshare provides a distribution channel for Haiku Deck to present its products. It’s a win-win partnership.

Currently, Haiku Deck is only available on iPad.  It’s pretty possible for the company to expand the platforms to desktop and Android versions.

Remitly – Pricing and Distribution

Remitly is a convenient service for those wanting to send financial support to friends and family overseas, particularly to those in the Philippines. They market themselves as service that is able to get rid of high transfer rates, low exchange rates, delays and long lines that are typical of money transfers overseas. Started in Seattle, Remitly has been able to specialize in one market targeting Filipino immigrants who have settled in Washington but their product is also available in seventeen other state around the US.

Remitly has created an interesting pricing model for its customers. Its pricing model is dependent on the avenue chosen by the customer for delivering cash to family and friends overseas. In some cases, individuals can use Remitly for free with no fee for transferring cash to individuals in the Philippines. In other cases, the cost per transaction can be as much as $4.59 per transaction. This depends on whether the individual receiving the transfer will be receiving it as cash, as a bank deposit, or on their mobile phone (it is worth noting that the starting price for transferring money using Western Union is $5).In order to use Remitly, the sender must have an account with the site, but it is free to register. Since the user pays for every transaction, Remitly must ensure that transfer goes smoothly to convince the customer to return in the future and then to share this information with others in their network.

While the pricing model allows the consumer to use Remitly free of charge, the potential market for money transfers is very large, creating the opportunity for Remitly to sell advertising space and potentially provide additional products and services to their customers.

Though not much is available about Remitly’s current distribution model, they appear to be marketing their product directly to the consumer. Currently they are using facebook, twitter, and linkedin as tools for advertising their product. In addition, Remitly recently received $2.6 million from Trilogy Equity Partnership which will allow them to expand and improve their advertising and distribution channels. While the web will be the most affordable way for them to expand their customer base, it may also be worth exploring advertising at cultural staples such as Filipino grocery stores and churches. They could also pursue partnerships with banks in Filipino communities. As they continue to grow, partnerships with regional and national banks may be an option especially as the customer base grows and taps into emerging markets overseas.

 

 

Dwellable – Positioning

Dwellable – Positioning

Dwellable describes themselves as the google of vacation rentals. Through their website, you can find all available vacation rentals in some of the most popular vacation destinations primarily in the United States. Dwellable’s tag line is “Where do you want to go” and their sites specializes in homes and condos that also have pictures, reviews and maps available for those looking for a  rental property.

Based on the list of vacation destinations featured on the front page of their website, Dwellable’s target audience is upper middle income families who want the amenities of home while on vacation in places such as Cape Cod, Hawaii, and Lake Tahoe. Since it is likely that this market segment is also busy in their day to day lives, Dwellable wants to provide one stop shopping for vacation home hunters. The site is easy to use, provides instant feedback about availability as you enter specific information about the type of space required for your stay. Though you can get the same information on other sites, such as VRBO, Dwellable will search all available rentals in an area pulling from real estate sites, homeaway.com, and other commonly used websites to provide one stop shopping (with the exception of VRBO).

Dwellable appears to be positioning themselves well as a vacation rental search engine. Their website is attractive and easy to understand. They also have applications that can be used on the iphone, ipad or android, making their website accessible to people on the go – an important feature for those who are likely to use the site. However, they are limited in the number of locations the site is able to search. This is likely to deter a user especially if they want to compare potential vacation spots across a state such as California. In addition, they do not have a compare option that would allow individuals to compare features of various rental properties. These features would help them position themselves more efficiently to the busy mom/dad, company, grandmother looking for the perfect vacation location.

In order to more effectively highlight their access to Western vacation properties until they have built out their connections around the United States.  With their strong connections in Hawaii, California, Washington, and Oregon, they are appropriately positioned to acquire significant market share of those looking for a vacation rental in these places. With the addition of Alaska and more listings throughout California including Big Sur, Los Angeles, and the San Francisco area, Dwellable can emerge as the leader in the West while continuing to expand its connections elsewhere. 

One final note, Dwellable focuses on the Business to Cutomer side of their business but could also put more emphasis on the business to business connections that are possible, targeting individuals who want to rent their homes. 

Survey for Startup Weekend

Sorry for the lateness on this, but here is a link to a survey from one of the Startup Weekend Teams.

http://bit.ly/YvzUGM