Comment by shubhamjain
Comment by shubhamjain 3 days ago
> Additionally, there's plenty of "Upgrade to Pro" buttons sprinkled about. It's the freemium model at work.
I don't think they care much about few "Pro" upgrades here and there. The real money, and their focus as a company, is in enterprise contracts. Note that, Matthew Prince, the CEO, had outlined a few reasons why they have such a generous free tier on an Stack Exchange answer[1]. I think the biggest reason is this:
> Bandwidth Chicken & Egg: in order to get the unit economics around bandwidth to offer competitive pricing at acceptable margins you need to have scale, but in order to get scale from paying users you need competitive pricing. Free customers early on helped us solve this chicken & egg problem. Today we continue to see that benefit in regions where our diversity of customers helps convince regional telecoms to peer with us locally, continuing to drive down our unit costs of bandwidth.
Cloudflare had decided long ago that they wanted to work at an incredible scale. I would actually be very interested in understanding how this vision came to be. Hope Matthew writes that book someday.
I think there are a few other benefits (even if that was the main benefit/driving force behind the decision).
When you have low-paying (or zero-paying) customers, you need to make your system easy. When you're enterprise-only, you can pay for stuff like dedicated support reps. A company is paying you $1M+/year and you hire someone at $75,000 who is dedicated to a few clients. Anything that's confusing is just "Oh, put in a chat to Joe." It isn't the typical support experience: it's someone that knows you and your usage of the system. By contrast, Cloudflare had to make sure that its system was easy enough to use that free customers would be able to easily (cheaply) make sense of it. Even if you're going to give enterprise customers white-glove service, it's always nice for them when systems are easy and pleasant to use.
When you're carrying so much free traffic, you have to be efficient. It pushes you to actually make systems that can handle scale and diverse situations without just throwing money at the problem. It's easy for companies to get bloated/lazy when they're fat off enterprise contracts - and that isn't a good recipe for long-term success.
Finally, it's a good way to get mindshare. I used Cloudflare for years just proxying my personal blog that got very little traffic. When my employer was thinking about switching CDNs, myself and others who had used Cloudflare personally kinda pushed the "we should really be looking at Cloudflare." Free customers may never give you a dollar - but they might know someone or work for someone who will give you millions. Software engineers love things that they can use for free and that has often paid dividends for companies behind those free things.