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Which pricing model will best work for a new SaaS provider trying to co-exist/compete with Dropbox/Box.com?

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JASON LEMKIN

More expensive — or the same.

Let me explain. DropBox and Box and many others compete in a very mature, saturated … but very large … market.

Generally, in large markets, there is always at least some room at the bottom for a “cheaper but still works fine” solution. More on that here: https://www.saastr.com/dont-conf… In this case, however, free alternatives such as Google Drive and others have mostly filled up the bottom of the market.

So what’s left?

Well, “anchoring high” with a premium brand works in general — but in this space it is tough. Because Box seems to own that. If you build a more secure, more enterprise version of Box, that might work. But Box has done a decent job of that themselves.

Instead, you need a differentiated product. And cheap seems to be a tough play here.

Veeva Systems, for example, provides a Vault product that is much more expensive than Box. While the functionality is not the same, many of the goals are similar. But Vault is highly targeted to regulated industries with specific needs. This is an example of charging More for More.

Alternatively, Box was founded 12+ years ago, DropBox a decade ago. These are old products.

If you come up with a new version of either than is 10x better in a key area … at least one … try charging the same. This will create the least customer confusion. You are “Box but Better for _____” or “DropBox But We Can ______”. Charge the same but for one key feature that is 10x better … and your prospects and customers will understand it is a fair and good deal. For example, Egynte seems to have carved out a strong niche for customers than need hybrid cloud solutions with pricing that is comparable to Box (not much cheaper, not much more expensive). Both Egynte and Box’s base Business Plans are $15 a month. Coincidence? Unlikely.

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Published on November 27, 2017
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