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> So you can sign up for Dropbox directly and they get 100% of the fee or you can sign up through Apple and they get 70%. That might be more than their entire p

by adgar 14y ago

> So you can sign up for Dropbox directly and they get 100% of the fee or you can sign up through Apple and they get 70%. That might be more than their entire profit. (Emphasis mine) Sounds like it might be time to find a new business plan, then.

iloverobots 14y ago
Many businesses (especially in the technology space) operate on far lower margins than 30%.
- tomgallard 14y ago
  Really? Are you talking gross or net profit? I would be surprised to find many software products where the gross profit margin would be less than 50%.
  - shod 14y ago
    Dropbox isn't a software product; it's a service. What's more, it's a service that needs to be priced to compete with Apple's own iCloud.
    - batista 14y ago
      And it being charged 10 or 13 dollars a month doesn't make much difference, if it offers a compelling service. Software and service prices seem mostly arbitrary to me anyway. How else Aperture went from $300 to $100, Lightroom the same, BBEdit shed 70% of it's price in one day, etc etc... Same, why was iWork a $99 package and now it's 3 components are $10 each on the Mac App Store?
      - shod 14y ago
        I haven't looked at Aperture or Lightroom, but iWork's price change isn't quite as dramatic or inscrutable as you think: the retail package was $80, and the 3 App store components are $20 each. Apple likely lowered the price as an incentive to push users into its App store, where it gets a cut from every piece of software sold. Dividing the components and selling them individually probably brought in quite a few new users such as myself who didn't want to pay $80 for the full iWork package since it's only Keynote I'm interested in. Services are more deeply and negatively affected by price changes than software, though. A price change that seems insignificant to you can drive many users away. Look at the fiasco with Netflix last year; they changed their prices by about $6 and subsequently lost about a million subscribers within a few months. Some users see price increases as an indication of a service's instability in the marketplace (and therefore a cue to jump-ship). Most users have lower tolerance thresholds for price differences when comparing services than they do when comparing one-time purchases (like software). Regardless, now would be a really bad time for Dropbox to increase their pricing. Many Mac & iPhone users are watching iCloud closely and realizing that it could make Dropbox redundant for them. A price increase, even one as small as a ~$30 a year change for their 50+ plan (corollary to your $3 a month change), could push enough users away from the service that Dropbox is better off sticking to its guns.
  - Almaviva 14y ago
    Why shouldn't we talk about net profit? Taking 30% off the top can quite easily mean the difference between viability and not, quite easily, when you factor in employees, rent, marketing, legal fees, and absolutely everything else. Isn't this precisely what the discussion should be about, whether it makes non-viable a lot of businesses that provide value to people?
pyre 14y ago
What business are you running that has larger profit margins than 30%?
- codesuela 14y ago
  Obviosly he is a drug dealer
- batista 14y ago
  How about one that you adjust your prices by whatever so that 70% is the old 100%? If your competitors can offer lower prices and still give away 70%, then you're not competitive enough.
  - grhino 14y ago
    If your competition is the one that you have to give away your 30% to, maybe your competition is rigging the game?
    - gcb 14y ago
      just do like apple does with taxes. create a subsidiary. dropbox.com, charges $x for 5GB idropbox.com, a dropbox company, optionally in the caymans, charges $(1.3 * x) for 5GB and has an app.
  - kennywinker 14y ago
    You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use. They've rigged the game.
    - batista 14y ago
      >You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use. No, I know of that rule. Just jack the price everywhere --if the iPhone is an important market to you, that 30% is a factor you have to take into account in your overall pricing strategy. The same holds true for all of your competitors, after all. Either they give up the iOS market, or they have to do the same. So it's not like someone has an advantage over you. ( And, I'd say, if it IS an important market to you, well, you don't get to both have all those customers with their credit cards at the ready in a system someone else built out of thin air AND complain that you have to give him a cut).

by adgar 14y ago

iloverobots 14y ago

Many businesses (especially in the technology space) operate on far lower margins than 30%.

tomgallard 14y ago
Really? Are you talking gross or net profit? I would be surprised to find many software products where the gross profit margin would be less than 50%.
- shod 14y ago
  Dropbox isn't a software product; it's a service. What's more, it's a service that needs to be priced to compete with Apple's own iCloud.
  - batista 14y ago
    And it being charged 10 or 13 dollars a month doesn't make much difference, if it offers a compelling service. Software and service prices seem mostly arbitrary to me anyway. How else Aperture went from $300 to $100, Lightroom the same, BBEdit shed 70% of it's price in one day, etc etc... Same, why was iWork a $99 package and now it's 3 components are $10 each on the Mac App Store?
    - shod 14y ago
      I haven't looked at Aperture or Lightroom, but iWork's price change isn't quite as dramatic or inscrutable as you think: the retail package was $80, and the 3 App store components are $20 each. Apple likely lowered the price as an incentive to push users into its App store, where it gets a cut from every piece of software sold. Dividing the components and selling them individually probably brought in quite a few new users such as myself who didn't want to pay $80 for the full iWork package since it's only Keynote I'm interested in. Services are more deeply and negatively affected by price changes than software, though. A price change that seems insignificant to you can drive many users away. Look at the fiasco with Netflix last year; they changed their prices by about $6 and subsequently lost about a million subscribers within a few months. Some users see price increases as an indication of a service's instability in the marketplace (and therefore a cue to jump-ship). Most users have lower tolerance thresholds for price differences when comparing services than they do when comparing one-time purchases (like software). Regardless, now would be a really bad time for Dropbox to increase their pricing. Many Mac & iPhone users are watching iCloud closely and realizing that it could make Dropbox redundant for them. A price increase, even one as small as a ~$30 a year change for their 50+ plan (corollary to your $3 a month change), could push enough users away from the service that Dropbox is better off sticking to its guns.
- Almaviva 14y ago
  Why shouldn't we talk about net profit? Taking 30% off the top can quite easily mean the difference between viability and not, quite easily, when you factor in employees, rent, marketing, legal fees, and absolutely everything else. Isn't this precisely what the discussion should be about, whether it makes non-viable a lot of businesses that provide value to people?

pyre 14y ago

What business are you running that has larger profit margins than 30%?

codesuela 14y ago
Obviosly he is a drug dealer
batista 14y ago
How about one that you adjust your prices by whatever so that 70% is the old 100%? If your competitors can offer lower prices and still give away 70%, then you're not competitive enough.
- grhino 14y ago
  If your competition is the one that you have to give away your 30% to, maybe your competition is rigging the game?
  - gcb 14y ago
    just do like apple does with taxes. create a subsidiary. dropbox.com, charges $x for 5GB idropbox.com, a dropbox company, optionally in the caymans, charges $(1.3 * x) for 5GB and has an app.
- kennywinker 14y ago
  You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use. They've rigged the game.
  - batista 14y ago
    >You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use. No, I know of that rule. Just jack the price everywhere --if the iPhone is an important market to you, that 30% is a factor you have to take into account in your overall pricing strategy. The same holds true for all of your competitors, after all. Either they give up the iOS market, or they have to do the same. So it's not like someone has an advantage over you. ( And, I'd say, if it IS an important market to you, well, you don't get to both have all those customers with their credit cards at the ready in a system someone else built out of thin air AND complain that you have to give him a cut).