Re:Dropbox to cut 11% of its global workforce
by troydavis on Wednesday January 13, 2021 @12:53PM
(#25765565)
> I'm guessing they bank on a small % of "whale" consumers using all their allowance and everyone else being way under the limit
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.)
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.)