For a £7.99/month plan, the cost of goods sold (COGS) on the actual storage and bandwidth is probably about 33% of that -- and that's based on average usage.
Here's a longer explanation with citations that I wrote in 2018: https://news.ycombinator.com/item?id=16465883#16470633. I haven't looked at their annual reports since then, but the COGS could have easily dropped by 50% in that time, so it might be way less than 33%.
Just based on that 2018 data, the other £5 or so is customer acquisition cost, software development, support, administration, and everything else.
The COGS is a small enough part of the price that, even if they could remove a lot of it (by reducing usage and/or the cap), the absolute cost reduction might be 10% or 20% of the current price.
This is true for the smaller plans of almost all SaaS. The vendor's variable COGS are not what you're paying for. (Exception: cloud services with entirely usage-based pricing and no monthly minimum, like S3. Those are rare.)
If Dropbox were to offer a 500GB package for half price, 99% of their customers that found out about it would switch to that. What's worse, they would likely open themselves up to a class action suit for people who feel like they overpaid for years.
Introducing a cheaper, lower capacity subscription now would be suicide for the company.
That's overly dramatic. Companies cut prices every day.
It is however true that Dropbox cannot compete on price with the likes of MS, Google, and Apple. They can only compete on experience and features, and few people are impressed by their evolution in those areas.
Do we really need a monstruous (and monstruously slow) html view when right-clicking on the systray icon? Do we really need online file-viewers that, most of the times, seem meant to stop you from getting at the actual file?
Dropbox was great when it did one thing flawlessly and got out of your way, while allowing for hackability and true cross-platform support. When they were doing fun things like the easter-egg-hunts and challenges to get extra space. Now they often feel like Yet Another SV App shouting "LOOK AT ME! LOOK AT ME! I CAN DO THIS AND THAT AND YOU DON'T NEED ANYTHING ELSE IN YOUR LIFE! LET ME INGEST ALL YOUR DATA AND LOCK YOU IN FOREVER!". I still have an account mostly because I have a free grandfathered account, but the minute they turn it off (and inevitably they will, since they are now a Serious Company with Serious Strategies and Serious Spreadsheets) I'll just check out.
On the way out, Dropbox blocked me from deleting 'tex.web' on my local machine, because it thought it owned anything with a '.web' extension.
Domains are really close to 0 support. Can you email support questions when Dropbox starts acting weird? For $10-$20 a year, one support ticket makes the customer unprofitable for the entire year.
Real thin margins, seems gross to try and build a business on the $1-$2 a month thing. I wouldn’t.
Works for a Titans like apple and google because they are making money in other ways..
Reminded me of this story [0] of a team with a 500TB account serving as a database and VCS.
[0] https://www.reddit.com/r/sysadmin/comments/eaphr8/a_dropbox_...
I'm guessing they bank on a small % of "whale" consumers using all their allowance and everyone else being way under the limit
I've stuck with Google drive for the 100gb plan at £1.99 which suits my needs, but would move to Dropbox in a heartbeat if they offered a similar tier