


You have seen this from cereal packages you buy to the group discounts you get when you register for conferences. This is classic example of non-linear pricing where the total price does not increase linearly with units but curves down as volume increases. The price per user that for all practical purposes starts at $159/user starts sloping down and reaches the lowest value of $127/user with three other price points in between ($132, $128 and $127). While it possible to license for any arbitrary number of users past 5, the tiers act as price boundaries. Having adopted $795 as the base price Dropbox has created multiple price tiers based on different number of users. Makes very good sense as it assures a floor price and makes sure the revenue is aligned with fixed cost to serve these business customers. But Dropbox decided not to unbundle it any further and make $795 the entry price for a 5 member team. However if there exists such a team that values the features available only in the Business edition they would pay. Clearly it makes no economic sense for a 1,2 or even 3 member team to pay for this version. The entry price is $795/year – either you want 1 or 5 users you pay that single price. Take a look at this very nicely done price estimation tool of Dropbox business edition.
