Drop.io Launches Realtime File Sharing; Should Paid Upgrades Be Their Focus?

Late last week I was contacted by Drop.io co-founder Sam Lessin to check out their newest launch. Today their updated file sharing platform went live — you can read about the updates on ArsTechnica and on the Drop.io blog. The basic idea is that files you upload are available to people you’ve shared the "file drop" with instantly along with the ability to chat on any file drop.

As I was sitting in the barber chair this morning reading the various posts on the launch, one thing appeared to be missing from every post. The missing piece in all of the posts is that Drop.io’s business model is based on upgrades. For drop.io, more drops is really meaningless except for a stat to share with the media. The key is getting people to either pay to upgrade the size of their file drops or get companies into their "manager" program which is also fee-based.

I am curious as to whether today’s updates will push people into either paid option listed above. The more I thought about it on the subway, I couldn’t find a solution that pointed to yes. The new features will certainly be used which is great for overall system usage.

When you offer a freemium model, the key should always be to push users into the paid options. Conversion is of utmost importance. Unlike most services, Drop.io isn’t showing ads to their free users making those accounts completely free of revenue.

I am sure that Sam has a plan with regards to pushing people into upgrades that will generate revenue for the company. I am sharing my thoughts here because getting users moved into paid plans is a question I am often asked. I continue to believe that if you are offering a freemium model, you need to offer as little as possible to keep people using the service for free while always trying to push them to upgrade. At the same time, you should always give your free customers a taste of what’s available behind the pay wall.