PRICING PROPOSAL FOR STORAGE SOLUTIONS

Presented by
Bramhaiah
Pricing Proposal for storage solutions

Overview
WhatsApp has Identified that users are transferring huge files within groups and facing space
crunch on their mobile Phones. To address this WhatsApp is offering storage solutions
integrated with WhatsApp where the files would automatically store on cloud and no mobile
space is consumed.

This Document provides the pricing approach for the storage solution for WhatsApp users.

What is WhatsApp?
Launched in 2009, WhatsApp has quickly become the world’s most popular text and voice
messaging application. Specializing in cross-platform messaging, WhatsApp is a free service that
lets users message one another seamlessly between mobile and desktop devices.
WhatsApp is known for its enhanced privacy features, like end-to-end encryption, and its free,
web-based international calling.

Pricing Approach
Based on the WhatsApp user acquisition model and Value (Revenue per account), Plan based
Pricing approach best fits for WhatsApp. Some other Popular Pricing Approaches are Usage
based and Account Based(B2B)

High Value Per Account

Client Based Pricing
Usage Based Pricing

Self Service Complex Sales Processes

No Business Exists

Plan Based Pricing

Low Value Per Account

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Pricing Strategy for WhatsApp Storage

WhatsApp is an existing Free Messaging App for users. Since WhatsApp is free, we cannot go
with Premium or Skimming approach since users have already adopted WhatsApp and the price
for storage should not create an Impact on usage. There are two Strategies for WhatsApp
storage pricing “Economy” and “Penetration”. Since WhatsApp has already penetrated into the
market and is free, Economy pricing strategy is the best Option for Storage Pricing.

Reasons for Economy Pricing:

1)Existing App is free and penetrated into the market, there is no need for penetration
approach.
2)The Storage service is simple and is only for backing up the user data outside Mobile with no
other features that exists in other cloud storage providers.
3)There should not barrier for users to opt service and should be economical with the current
offerings in market.

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Analysis on Storage Costs

WhatsApp requires to have business integration with the cloud storage vendors, since the
primary focus for WhatsApp is not storage. Below is the high-level view of storage costs with
top vendors. For Whatsapp users primary offering is storage and retrieval with no other
features.

Analysis on the above Offerings:

1)Among the Top Vendors Google Cloud Storage is cheaper for 1TB of storage which is around
$24/month.

2)There could be 10,000 PUT and GET requests with the above cost which is reasonable for a
typical WhatsApp user.


Cost to WhatsApp for Storage:


1)Assuming WhatsApp gets an enterprise discount, cost for 1TB storage would be 20$.

2)Above cost if broken down it would lead to 10$ for 500GB and 4 $ for 200GB per month

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Pricing Proposal
Considering the Cost of storage above for WhatsApp, below are the proposed plans for storage
for Individual Users.

Individual

Below are the Plans for Individual users:

Monthly Plans

Basic Economy Premium

Cost 12.99$ 15.99$ 26.99$
Storage 200GB 500GB 1TB
Billing Cycle Monthly Monthly Monthly

Yearly Plans

Basic Economy Premium

Cost 129.99$ 159.99$ 266.99$
Storage 200GB 500GB 1TB
Billing Cycle Annual Annual Annual

Reasons for Above Prices:

1) The storage denominations and price differences are designed as to push users for
higher plans.
2) The Annual plans have been made cheaper than users sticking to monthly plan for 1
year

Break Even Analysis with above Pricing

Given we head to the market with the above pricing options, then below would be the required
units for WhatsApp to reach break-even point.

Assuming it takes 2,50,000 $ (0.25 M) fixed cost Monthly for WhatsApp Storage division to
function per Month.

Considering users are opting the lowest tier - $12.99 per Month.

Fixed Cost - $ 2,50,000 $

Variable Cost - $ 4 (Charged by Vendor)

Sales Price - $ 12.99

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Units of Sale -100 /Month

Launch: Jan-2020

Break-Even Point on Units:

Fixed Costs ÷ (Sales price per unit – Variable costs per unit)

SUMMARY OF INPUT

Total fixed costs $250,000

Variable cost per unit $4
Sales price per unit $12.99
Anticipated unit sales/Month 100

Conclusion
By Oct-2020 we would reach break-even point, considering 100 users per month onboarded
into at least Basic plan of storage. We would require having 27,809 users onboarded to reach
the break-even point and by then we would have loss of $-249,101.

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