CloudFlare is on a revenue run-rate of $40M for 2014. They currently have 2M websites, with only 4% – 5% paying for services. That means 1.9M websites are receiving free CDN services. That’s very generous of CloudFlare, but is that a sound financial strategy? I can’t figure it out for the life of me, why is CloudFlare doing the opposite of all CDNs, including Akamai, Limelight, EdgeCast, MaxCDN and Level 3? CloudFlare is the only pure-play CDN in the ecosystem to sell CDNs services on a non-usage basis.
Currently, they offer three payment plans: $20/mo, $200/mo and $5,000/mo. In the footnotes they state “CloudFlare will never bill you for bandwidth usage…..” Thus, if a customer buys a $20/month plan, and delivers several dozens TBs/month of data transfer, the bill remains $20/month. Under normal circumstances, the same data transfer volume with another CDN would generate thousands of dollars per month. Also, what if a customer is paying Limelight $2k/month, and they decide to move to CloudFlare. CloudFlare is going to lose a significant amount of customer spend, because the customer will likely select the $200/month plan, and CloudFlare will miss out on several hundred dollars per month in additional revenue. There is no middle ground with CloudFlare’s pricing plans.
 CloudFlare Pricing Plans
|
Plan |
Cost |
Features |
|
Free |
Free |
CDN, security protection and stats |
|
Pro |
$20 per month |
Features above + WAF, SSL, real time stats and mobile optimizations |
|
Business |
$200 per month |
Features above + advanced DDoS services, and dynamic content acceleration |
|
Enterprise |
$5,000 per month |
Features above plus dedicated account manager, 24/7 support and SLA |
Conclusion
CloudFlare should seriously consider revamping their pricing plans so its more in line with the industry. Maybe CloudFlare can offer free CDN services up to a certain monthly volume, like 200GB per month, and charge a nominal fee like $5/month for each additional 100GB block of data transfer. There are a hundred different ways to price out CDN services, and CloudFlare needs to figure it out soon or it’s going to impact revenue growth in the long term. CloudFlare might lose a few hundred thousand customers in the process, but it might gain tens of thousands of paying customers contributing tens of millions of dollars to the top line every month.