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> Additionally, there's plenty of "Upgrade to Pro" buttons sprinkled about. It's the freemium model at work. I don't think they care much about few "Pro" upgra

> Additionally, there's plenty of "Upgrade to Pro" buttons sprinkled about. It's the freemium model at work. I don't think they care much about few "Pro" upgrades here and there. The real money, and their focus as a company, is in enterprise contracts. Note that, Matthew Prince, the CEO, had outlined a few reasons why they have such a generous free tier on an Stack Exchange answer[1]. I think the biggest reason is this: > Bandwidth Chicken & Egg: in order to get the unit economics around bandwidth to offer competitive pricing at acceptable margins you need to have scale, but in order to get scale from paying users you need competitive pricing. Free customers early on helped us solve this chicken & egg problem. Today we continue to see that benefit in regions where our diversity of customers helps convince regional telecoms to peer with us locally, continuing to drive down our unit costs of bandwidth. Cloudflare had decided long ago that they wanted to work at an incredible scale. I would actually be very interested in understanding how this vision came to be. Hope Matthew writes that book someday. [1]: https://webmasters.stackexchange.com/a/88685 https://webmasters.stackexchange.com/a/88685.

jgrahamc 2y ago
I went back and reread that reply by Matthew. Essentially, nothing has changed; the free customers are very important to us for all the reasons that he outlined. See also this blog post on us and free customers from 2024: https://blog.cloudflare.com/cloudflares-commitment-to-free/ https://blog.cloudflare.com/cloudflares-commitment-to-free/
- bobnamob 2y ago
  ^ CTO of Cloudflare for reference
mdasen 2y ago
I think there are a few other benefits (even if that was the main benefit/driving force behind the decision). When you have low-paying (or zero-paying) customers, you need to make your system easy. When you're enterprise-only, you can pay for stuff like dedicated support reps. A company is paying you $1M+/year and you hire someone at $75,000 who is dedicated to a few clients. Anything that's confusing is just "Oh, put in a chat to Joe." It isn't the typical support experience: it's someone that knows you and your usage of the system. By contrast, Cloudflare had to make sure that its system was easy enough to use that free customers would be able to easily (cheaply) make sense of it. Even if you're going to give enterprise customers white-glove service, it's always nice for them when systems are easy and pleasant to use. When you're carrying so much free traffic, you have to be efficient. It pushes you to actually make systems that can handle scale and diverse situations without just throwing money at the problem. It's easy for companies to get bloated/lazy when they're fat off enterprise contracts - and that isn't a good recipe for long-term success. Finally, it's a good way to get mindshare. I used Cloudflare for years just proxying my personal blog that got very little traffic. When my employer was thinking about switching CDNs, myself and others who had used Cloudflare personally kinda pushed the "we should really be looking at Cloudflare." Free customers may never give you a dollar - but they might know someone or work for someone who will give you millions. Software engineers love things that they can use for free and that has often paid dividends for companies behind those free things.
- ljm 2y ago
  I feel like there might be an additional motivation too, which is that this investment in a better internet (free SSL for everyone before LetsEncrypt came around, generous free tiers for users, etc. etc.) means that Cloudflare builds a reputation of being a steward of the ecosystem while also benefitting indirectly from wider adoption of good, secure practices. In some ways it's analogous to investing in your local community and arguably paying tax: it's rare that you would directly and personally benefit from this, but if the environment you live in improves from it, crime is reduced, more to do, etc. then you can enjoy a better quality of life.
  - ipaddr 2y ago
    Have they made a better internet? Many would say that made it worse.
    - lostlogin 2y ago
      I don’t know the history here, do you have some examples? My usage is pretty much limited to their DNS.
      - iamacyborg 2y ago
        They’ve got a pretty long history of helping scammers and criminals. https://www.spamhaus.org/resource-hub/service-providers/too-big-to-care-our-disappointment-with-cloudflares-anti-abuse-posture/ https://www.spamhaus.org/resource-hub/service-providers/too-...
        Aeolun 2y ago
        So the better internet is for everyone, is that so bad? I’d rather have them help everyone than make arbitrary decisions about who gets served. That’s what we have the legal system for.
        lostlogin 2y ago
ndiddy 2y ago
> I don't think they care much about few "Pro" upgrades here and there. The real money, and their focus as a company, is in enterprise contracts. Cloudflare's enterprise customer acquisition strategy seems to be offering free or extremely cheap flat-rate plans with "no limits", then when a customer gets a sizeable amount of traffic they will try to sell them an enterprise plan and cut them off if they don't buy (see https://robindev.substack.com/p/cloudflare-took-down-our-website https://robindev.substack.com/p/cloudflare-took-down-our-web...). IMO this is pretty shrewd, as it means that companies can't do real price comparisons between Cloudflare and other CDNs until they already have all their infrastructure plugged into Cloudflare.
- pc86 2y ago
  I haven't heard about this in particular but based entirely on your depiction here it sounds more like fraud to me. If I was paying a flat rate for a no limit plan, that company tried to sell me an Enterprise plan which I declined, then they cut me off, we'd be in court as soon as the clerk would schedule it.
  - jamespo 2y ago
    If you were rotating IPs against the TOS I don't think you'd have a leg to stand on
    - pc86 2y ago
      The GP doesn't mention anything about rotating IPs
      - NicoJuicy 2y ago
        I think he is saying that the customer, a casino. Had a dubious legal status in different countries. They are often banned. Cloudflare doesn't want their IP's (rotating) to be affected so advised bring your own IP, which is an Enterprise feature.
- vasco 2y ago
uncertainrhymes 2y ago
I've always wondered if there is an accounting benefit for them. Can the free tier be charged as 'marketing'? No idea how you would internally break up the costs, but it could make your margins look better.
crowcroft 2y ago
It's a very elegant business strategy because you have one clear focus (handle loads of bandwidth), but it can be expressed in so many ways (DNS/Caching, object storage, video delivery/streaming, static site hosting).
AnthonyMouse 2y ago
> Bandwidth Chicken & Egg: in order to get the unit economics around bandwidth to offer competitive pricing at acceptable margins you need to have scale, but in order to get scale from paying users you need competitive pricing. Free customers early on helped us solve this chicken & egg problem. I'm not really sure how this works. Suppose you have paying customers and for that you need X amount of bandwidth. If you add a bunch of free customers then you need X + Y bandwidth. But the price of X + Y is never going to be lower than the price of X, is it? So even if the unit cost is lower, the total cost is still higher and you haven't produced any additional revenue in exchange, so how can this produce any net profit?
- chippiewill 2y ago
  The point is that that you get your paid offering down to a lower price point because you have the volume to get the cheaper peering deals. Because your paid offering is cheap you get even more volume from paying customers which offsets the loss you made.
- mugsie 2y ago
  it may be, especially if the ISP in question just does direct peering with you, your unit cost can drop to ~ $0/MB, and you stop paying Cogent/Verizion/HE unit cost for facilitating the connection from you to the ISP. Works for the ISP too, one off cost for them to drop there side of the bill down
- bauruine 2y ago
  If you send 10Gbit/s to an ISP you have to pay for transit to reach it. But if you send 100Gbit/s+ the ISP suddenly is willing to not only peer for free with you but may even host the servers for you in their data center for free. [0][1][2] So yes being bigger can absolutely save you costs. [0]: https://www.cloudflare.com/partners/peering-portal/ https://www.cloudflare.com/partners/peering-portal/ [1]: https://openconnect.netflix.com/en/ https://openconnect.netflix.com/en/ [2]: https://support.google.com/interconnect/answer/9058809?hl=en https://support.google.com/interconnect/answer/9058809?hl=en
  - 2y ago
benatkin 2y ago
> Cloudflare had decided long ago that they wanted to work at an incredible scale. This reminds me of the story of how Jeff Bezos bought relentless.com. The rest is history. https://pluralistic.net/2022/11/28/enshittification/ https://pluralistic.net/2022/11/28/enshittification/
nickcw 2y ago
I think this is the important part > Today we continue to see that benefit in regions where our diversity of customers helps convince regional telecoms to peer with us locally, continuing to drive down our unit costs of bandwidth If you can peer your traffic you can send it for free. So lots of small customers, despite not paying anything, is helping to reduce bandwidth costs for Cloudflare to zero. If they've reduced bandwidth costs to zero then they can afford to give it away for free. I can tell you from personal experience that getting some ISPs to peer with you is hard unless you are exchanging lots of traffic already. This is a clever playbook that has made Cloudflare a tier 1 ISP in an age when that is extremely difficult.
- j16sdiz 2y ago
  - Not every peering is free. - You still have to pay for the fibre and router.
  - inemesitaffia 2y ago
    Power and rent too
DrBenCarson 2y ago
And this works IME I use Cloudflare for hobby projects 90% of the time because it’s free. That dramatically increases the likelihood I advocate for their offerings in the enterprise
- parkerproject 2y ago
  [dead]
NicoJuicy 2y ago
That's not the complete story. Cloudflare's main income is DDOS, which is incoming traffic they pay for. They pay for that pipeline (which you pay for up and down traffic), so they have a generous free CDN because they already pay for it. ( Unrelated to workers, ... )
mcmcmc 2y ago
The hidden purpose of a free tier is to discourage competition
- bluedino 2y ago
  Expand on this please?
  - mcmcmc 2y ago
    Let’s say you’re looking to break into the Fun as a Service market. The incumbent offers 100 hours of Fun per year as a free service and charges enterprise prices above that. If you want to start a Fun as a Service competitor, to have any chance of competing for new signups you also have to front 100 hours/year for anyone who wants to try it at a 100% loss, before you can even start making money. It’s the same principle behind predatory pricing, which is illegal but rarely enforced. The goal is to make it too expensive for new players to enter the market, or to force existing competitors out.
speleding 2y ago
Another likely reason: the process of metering bandwidth accurately enough to use as input for a billing process costs money. On their distributed setup it's probably seriously expensive to do accurate bandwidth metering per site. Probably more expensive than they expect to make by pricing bandwidth.
estsauver 2y ago
Cloudflare generally seems to have a really smart strategy team. There's a really excellent Stratechery article about Cloudflare's strategy team more generally: (Stratechery is down now, but the web archive is up.) https://web.archive.org/web/20250108182845/https://stratechery.com/2021/cloudflares-disruption/ https://web.archive.org/web/20250108182845/https://strateche... https://stratechery.com/2021/cloudflares-disruption/ https://stratechery.com/2021/cloudflares-disruption/

jgrahamc 2y ago

I went back and reread that reply by Matthew. Essentially, nothing has changed; the free customers are very important to us for all the reasons that he outlined. See also this blog post on us and free customers from 2024: https://blog.cloudflare.com/cloudflares-commitment-to-free/ https://blog.cloudflare.com/cloudflares-commitment-to-free/

bobnamob 2y ago
^ CTO of Cloudflare for reference

mdasen 2y ago

I think there are a few other benefits (even if that was the main benefit/driving force behind the decision). When you have low-paying (or zero-paying) customers, you need to make your system easy. When you're enterprise-only, you can pay for stuff like dedicated support reps. A company is paying you $1M+/year and you hire someone at $75,000 who is dedicated to a few clients. Anything that's confusing is just "Oh, put in a chat to Joe." It isn't the typical support experience: it's someone that knows you and your usage of the system. By contrast, Cloudflare had to make sure that its system was easy enough to use that free customers would be able to easily (cheaply) make sense of it. Even if you're going to give enterprise customers white-glove service, it's always nice for them when systems are easy and pleasant to use. When you're carrying so much free traffic, you have to be efficient. It pushes you to actually make systems that can handle scale and diverse situations without just throwing money at the problem. It's easy for companies to get bloated/lazy when they're fat off enterprise contracts - and that isn't a good recipe for long-term success. Finally, it's a good way to get mindshare. I used Cloudflare for years just proxying my personal blog that got very little traffic. When my employer was thinking about switching CDNs, myself and others who had used Cloudflare personally kinda pushed the "we should really be looking at Cloudflare." Free customers may never give you a dollar - but they might know someone or work for someone who will give you millions. Software engineers love things that they can use for free and that has often paid dividends for companies behind those free things.

ljm 2y ago
I feel like there might be an additional motivation too, which is that this investment in a better internet (free SSL for everyone before LetsEncrypt came around, generous free tiers for users, etc. etc.) means that Cloudflare builds a reputation of being a steward of the ecosystem while also benefitting indirectly from wider adoption of good, secure practices. In some ways it's analogous to investing in your local community and arguably paying tax: it's rare that you would directly and personally benefit from this, but if the environment you live in improves from it, crime is reduced, more to do, etc. then you can enjoy a better quality of life.
- ipaddr 2y ago
  Have they made a better internet? Many would say that made it worse.
  - lostlogin 2y ago
    I don’t know the history here, do you have some examples? My usage is pretty much limited to their DNS.
    - iamacyborg 2y ago
      They’ve got a pretty long history of helping scammers and criminals. https://www.spamhaus.org/resource-hub/service-providers/too-big-to-care-our-disappointment-with-cloudflares-anti-abuse-posture/ https://www.spamhaus.org/resource-hub/service-providers/too-...
      - Aeolun 2y ago
        So the better internet is for everyone, is that so bad? I’d rather have them help everyone than make arbitrary decisions about who gets served. That’s what we have the legal system for.
        lostlogin 2y ago

ndiddy 2y ago

> I don't think they care much about few "Pro" upgrades here and there. The real money, and their focus as a company, is in enterprise contracts. Cloudflare's enterprise customer acquisition strategy seems to be offering free or extremely cheap flat-rate plans with "no limits", then when a customer gets a sizeable amount of traffic they will try to sell them an enterprise plan and cut them off if they don't buy (see https://robindev.substack.com/p/cloudflare-took-down-our-website https://robindev.substack.com/p/cloudflare-took-down-our-web...). IMO this is pretty shrewd, as it means that companies can't do real price comparisons between Cloudflare and other CDNs until they already have all their infrastructure plugged into Cloudflare.

pc86 2y ago
I haven't heard about this in particular but based entirely on your depiction here it sounds more like fraud to me. If I was paying a flat rate for a no limit plan, that company tried to sell me an Enterprise plan which I declined, then they cut me off, we'd be in court as soon as the clerk would schedule it.
- jamespo 2y ago
  If you were rotating IPs against the TOS I don't think you'd have a leg to stand on
  - pc86 2y ago
    The GP doesn't mention anything about rotating IPs
    - NicoJuicy 2y ago
      I think he is saying that the customer, a casino. Had a dubious legal status in different countries. They are often banned. Cloudflare doesn't want their IP's (rotating) to be affected so advised bring your own IP, which is an Enterprise feature.
vasco 2y ago

uncertainrhymes 2y ago

I've always wondered if there is an accounting benefit for them. Can the free tier be charged as 'marketing'? No idea how you would internally break up the costs, but it could make your margins look better.

crowcroft 2y ago

It's a very elegant business strategy because you have one clear focus (handle loads of bandwidth), but it can be expressed in so many ways (DNS/Caching, object storage, video delivery/streaming, static site hosting).

AnthonyMouse 2y ago

> Bandwidth Chicken & Egg: in order to get the unit economics around bandwidth to offer competitive pricing at acceptable margins you need to have scale, but in order to get scale from paying users you need competitive pricing. Free customers early on helped us solve this chicken & egg problem. I'm not really sure how this works. Suppose you have paying customers and for that you need X amount of bandwidth. If you add a bunch of free customers then you need X + Y bandwidth. But the price of X + Y is never going to be lower than the price of X, is it? So even if the unit cost is lower, the total cost is still higher and you haven't produced any additional revenue in exchange, so how can this produce any net profit?

chippiewill 2y ago
The point is that that you get your paid offering down to a lower price point because you have the volume to get the cheaper peering deals. Because your paid offering is cheap you get even more volume from paying customers which offsets the loss you made.
mugsie 2y ago
it may be, especially if the ISP in question just does direct peering with you, your unit cost can drop to ~ $0/MB, and you stop paying Cogent/Verizion/HE unit cost for facilitating the connection from you to the ISP. Works for the ISP too, one off cost for them to drop there side of the bill down
bauruine 2y ago
If you send 10Gbit/s to an ISP you have to pay for transit to reach it. But if you send 100Gbit/s+ the ISP suddenly is willing to not only peer for free with you but may even host the servers for you in their data center for free. [0][1][2] So yes being bigger can absolutely save you costs. [0]: https://www.cloudflare.com/partners/peering-portal/ https://www.cloudflare.com/partners/peering-portal/ [1]: https://openconnect.netflix.com/en/ https://openconnect.netflix.com/en/ [2]: https://support.google.com/interconnect/answer/9058809?hl=en https://support.google.com/interconnect/answer/9058809?hl=en
- 2y ago

benatkin 2y ago

> Cloudflare had decided long ago that they wanted to work at an incredible scale. This reminds me of the story of how Jeff Bezos bought relentless.com. The rest is history. https://pluralistic.net/2022/11/28/enshittification/ https://pluralistic.net/2022/11/28/enshittification/

nickcw 2y ago

I think this is the important part > Today we continue to see that benefit in regions where our diversity of customers helps convince regional telecoms to peer with us locally, continuing to drive down our unit costs of bandwidth If you can peer your traffic you can send it for free. So lots of small customers, despite not paying anything, is helping to reduce bandwidth costs for Cloudflare to zero. If they've reduced bandwidth costs to zero then they can afford to give it away for free. I can tell you from personal experience that getting some ISPs to peer with you is hard unless you are exchanging lots of traffic already. This is a clever playbook that has made Cloudflare a tier 1 ISP in an age when that is extremely difficult.

j16sdiz 2y ago
- Not every peering is free. - You still have to pay for the fibre and router.
- inemesitaffia 2y ago
  Power and rent too

DrBenCarson 2y ago

And this works IME I use Cloudflare for hobby projects 90% of the time because it’s free. That dramatically increases the likelihood I advocate for their offerings in the enterprise

parkerproject 2y ago
[dead]

NicoJuicy 2y ago

That's not the complete story. Cloudflare's main income is DDOS, which is incoming traffic they pay for. They pay for that pipeline (which you pay for up and down traffic), so they have a generous free CDN because they already pay for it. ( Unrelated to workers, ... )

mcmcmc 2y ago

The hidden purpose of a free tier is to discourage competition

bluedino 2y ago
Expand on this please?
- mcmcmc 2y ago
  Let’s say you’re looking to break into the Fun as a Service market. The incumbent offers 100 hours of Fun per year as a free service and charges enterprise prices above that. If you want to start a Fun as a Service competitor, to have any chance of competing for new signups you also have to front 100 hours/year for anyone who wants to try it at a 100% loss, before you can even start making money. It’s the same principle behind predatory pricing, which is illegal but rarely enforced. The goal is to make it too expensive for new players to enter the market, or to force existing competitors out.

speleding 2y ago

Another likely reason: the process of metering bandwidth accurately enough to use as input for a billing process costs money. On their distributed setup it's probably seriously expensive to do accurate bandwidth metering per site. Probably more expensive than they expect to make by pricing bandwidth.

estsauver 2y ago

Cloudflare generally seems to have a really smart strategy team. There's a really excellent Stratechery article about Cloudflare's strategy team more generally: (Stratechery is down now, but the web archive is up.) https://web.archive.org/web/20250108182845/https://stratechery.com/2021/cloudflares-disruption/ https://web.archive.org/web/20250108182845/https://strateche... https://stratechery.com/2021/cloudflares-disruption/ https://stratechery.com/2021/cloudflares-disruption/