in the dropbox forums company representatives constantly comment that lower price plans are not feasible. That said, I've always been disappointed by companies that make you buy buckets of units (like postpaid cellphone plans) that they know you will never use rather than offering a per unit price. If the cost to provide 1gb of storage per month is higher than 10/50, than charge the higher price, don't hide it by shifting the cost of power users onto regular users.
Unit costs don't work at small scale. For one thing, there's no single ideal unit: In reality, it's a multidimensional space. If you charge by unit bucket size the folks who constantly churn their files may eat you alive with bandwidth charges; if you charge by unit bandwidth folks may upload great gobs of data; if you charge for both bandwidth and storage people will get mightily confused and will tend leave your product for a competitor with a more predictable pricing model. ;)
Costs are also nonlinear. The most nonlinear are support costs. You may pay as much to support the user who pays $1 for your service as the user who pays $100. (Unless you keep a meter running and charge by the support-minute, which makes customers very unhappy.) And in practice it's even worse than that: Anecdotal evidence suggests that the customers who are obsessed with saving money cost more to support.
And let me emphasize that costs aren't even the key issue. Engineers tend to forget this, but the price of a product need have little to do with the cost of producing it. Products should be priced based on value to a customer, and that doesn't scale linearly either. The first few hundred MB of Dropbox are the most precious of all, partly because that's enough to sync my most critical and frequently-changing files, and partly because it includes the installation and setup overhead (and, probably, most of the support costs). Then the next few GB is somewhat less precious. By the time we reach a 49GB plan, the value-per-GB is significantly lower. I don't have 60GB of important stuff. Moreover, Dropbox is significantly less convenient when shlepping around huge amounts of data, because it's not magical: It takes time to sync all that stuff over my lame-O cable connection.
He's in a position to know, and I am not, but this surprises me.
Personally, I hesitate at $10 a month when I am currently using less than the 2GB of free space available. If there were a $5/month plan that was even minutely better than the free offering, I would sign up without a second thought. I suspect I am far from the only one in that position.
The guys know better than me but with all Amazon's price reductions, 100Gb/year comes to $44.40. There are transfer costs on top of that however there are no longer transfer fees IN to S3 and I would guess that the OUT bandwidth is primarily generated by a small number of files on your machine and probably stays pretty linear past a certain point.
I think those prices were the cheapest viable at the start but it feels like there are more competitive ones now (and that's assuming they're not building their own cheaper datacentres).
I do believe them that lower prices are not feasible while they are reselling Amazon S3... this GDrive rumor might be the push Dropbox needs to bite the bullet and buy their own servers.
They definitely need to buy their own servers at some point in the future. I do remember storage is their main cost. With the big round they just closed, I can't imagine there's not a few engineers working on that already.
