A stats hound Tuesday (or any day…) item – A Look Inside Box: Competition, Product Plans, And Unit Economics | TechCrunch
Interesting look into the financial internals of Box’ (mostly storage) cost for the #Free accounts portion of their Freemium model, which they actually count as “marketing costs” (because they “warm up” the users for some of those later sales):
According to their pre-IPO S-1 filing $171 Million for 2013, for 25 Million registered users, of which something like 7% are paying “Premium” customers.
To keep the math simple let’s say that 2M are paying, so that leaves the remaining 23M costing 171 / 23 = about $7.50 per user per year. Obviously all of this is on average, as there will be plenty of abandoned accounts among the 23M, and plenty of even the actives using only marginal portions of their allotted X GBs of storage, asf.
Still, that shows that if Box could convince currently free users to pay them as little as $1/month, they would more than break even! (I’ve been arguing for about 6-12 months now that this is the route to go from here on out:
Cover infrastructure costs with a nominal (very low) monthly fee in the “Impulse Purchase Territory”, in return give to the users freedom from data harvesting, snooping, etc. etc. of all kinds.
Yes, that could include end-to-end encryption for non-collaboration files stored in your account among other things. And so forth.
(Additional #b2bsales and #enterprise relevant portions further down in the piece.)