Online Backup Pricing: Is a $59/year customer worth $55 to acquire?
When you see execution that doesn’t make sense, it’s natural to think that it’s the product of poor thinking, but I have found over the years that each person and organization lives in a reality different than mine, and that one man’s stupid is another’s smart. So I am not going to say that the recent moves on Carbonite’s IPO are stupid, but I will admit I don’t understand them.
Carbonite’s recent comments about customer acquisition costs, disclosed during their IPO, are roughly $55 per customer, each of which brings in $59 a year, and on average stays with Carbonite 5 years, according to Reuters recent article. However, a more deep look directly at the IPO filing shows Carbonite’s extremely high cost of customer acquisition, pegged at $91.68.
Online Backup Speculation?
Basically if Carbonite hadn’t spent investor’s money, and now the market’s money, they could not provide backup at their current price points, which means there’s a speculator of sorts in the online backup market, driving prices below what’s sustainable and good for the market.
After the IPO completed, many wondered aloud why Carbonite went forward when instead of raising $122m as projected, they had to settle for $62.5m. CNET (and others) opined that “. . .if