Blog Post

So long freebies? SugarSync switches to paid-only model

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

An enduring mystery of the booming cloud file management and storage world is exactly how many of the zillions of users claimed — by Box, by Dropbox, by insert-your-favorite-vendor here — actually pay for the services. All of those vendors offer free versions: The typical model is you get X amount of storage for free, then the meter starts running. Or you get base service for free but have to pay for advanced perks.

Free lunchSugarSync is putting a stake in the ground:  it’s ending its freemium version, so customers will have to pay after a 90-day or 30-day trial. Why? “The move will allow the company to further refine the service to better meet the evolving needs of its consumer and business subscribers,” according to the company’s press release.

“Free stuff” has been the go-to customer acquisition strategy for companies ranging from consumer-focused Dropbox to business-oriented Box. Egnyte relied heavily on free trial periods — not freemium per se — but then started offering free accounts to woo Box customers. Accellion, as far as I can tell, is an outlier, offering free trials but no freemium. But that is an exception to the rule — until now.

Freemium is a great way to get potential customers in the door, but it’s very hard to make them pay the rent. Conversion rates are well below 10 percent ) (I would guess 3 to 4 percent is more like it but would welcome input in comments below.)

As might be expected, SugarSync CEO Mike Grossman said that offering free storage indefinitely is “not a very sustainable model.” If you’re offering a real service, then it is worth something, he noted.

In SugarSync’s case much of that value lies in the ability of the customer — typically a “prosumer” or a small business — to use the folder structure of his or her choice and have that same folder structure available in the cloud, desktop and mobile device, with all folders updated continuously.

There is a subset of those customers who care very much about how their data is managed and stored across devices, and he is banking that there are enough of them there for SugarSync to flourish. SugarSync pricing starts at $7.49 per month (or $74.99 per year) for 60GB.

It will be extremely interesting to see if SugarSync’s move sparks other competitors to follow suit. In eras past, most rational beings realized that when it came to goods and services you got what you paid for. The problem now is that so many people have grown up with free accounts for their photos and documents, they see that as their birthright.

Good luck persuading them otherwise.

 Photo courtesy of  Flickr user KAZVorpal

63 Responses to “So long freebies? SugarSync switches to paid-only model”

  1. Daniel Arthursson is exactly as SugarSync with same mirror capabilities (sync multiple folders), WebDAV support (similar to iDisk), and support for several smart TV’s like Samsung SmartTV, WD TV Live and Google TV. 3 GB is offered for free (up to 19 GB with referral program), premium accounts up to 5 TB is available.

    Interesting features of CloudMe includes the ability to open and save back documents in Apple iPad Pages, Numbers, and Keynote. Streaming of music and creation of playlists and the ability to share and allow people to collaborate in folders without requiring them to also have a CloudMe account (through WebShares).

  2. The existing customers should have been grandfathered.. These are the users that were induced by the promise of additional free storage with no expiration date to use and promote the service to others. Now that these early adopters have done the leg work for SS and built its user base, SS unilaterally changes this agreement, and extorts fees for storage that was already earned by the early users. As quickly as word of mouth can build a company, so can it take it down. I expect the next article I read about SS will be an obituary.

  3. Mark Gooday

    “If a service is worth something”… But its not worth much. And they are charging ay over the odds.

    With torrentsync, you get most of what you get from sugarsync, without the insecurities of dumping stuff on their servers. But torrentsync uses a good ole software model rather than a service model. Taking software and calling it a service may convince some. But we all really know this process is just an attempt to make us all dependent agents rather than free ones.

    Paid insecure servitude versus free secure choice of software.

    I know where I am going…

  4. Pino Pini

    This is basically unfair. I do not care about the smallprint: I signed on and referred a bunch of friends because that was meant to be (and stay) free. How can I trust them (and pay them) for hosting my important data when they have proved so unreliable!? Good luck sugar, I am looking elsewhere…

  5. Bye Bye Sugarsync, if I’ve to pay I’ll switch to a Dropbox paid account: you cannot change your business model just saying “The move will allow the company to further refine the service to better meet the evolving needs of its consumer and business subscribers,”

    I’m not going to pay without knowing what you plan to refine, without a clear road map of how the product you’re offering me to buy today will be next july (for instance), and yes today is a cheap product but 75$ for 60 Gb is expensive if compared with Skydrive’s rates.
    So good bye to my free 40 Gb

  6. I have been using SugerSync for years now. But being an addict of Freemium for so long, cant digest the fact, a loved service will start charging their Free-Mium customers. Got to Move On, So, I thought of switching to Google Drive but as they already know too much about my online Identity, I rather choose these offline personal storage with other Vendor. So Choice Goes to SkyDrive. Hope this keep some dissociation between my Online with Offline Profile.

  7. Already Gone

    SugarSync seems to like to brainwash people into thinking they are unique in letting you sync specific folders but that is not the case. I compiled a list of “cloud syncers” and my search ended on my first try: Wuala by LaCie.

    I am using it to sync saved games between two computers. I already have a wonderful 10 device unlimited backup cloud. Why on earth would I pay SS for 60GB to sync tiny save game files? Uhhh no.

    I enjoyed my time with SS until they overhauled the UI recently. I refused to install the update, it was nasty. I would have stayed with them for 5-10$ per year for 5GB contingent on not having to use the new UI.