How can CloudFlare offer a free CDN with unlimited bandwidth?
Five reasons we offer a free version of the service and always will:
- Data: we see a much broader range of attacks than we would if we only had our paid users. This allows us to offer better protection to our paid users.
- Customer Referrals: some of our most powerful advocates are free customers who then "take CloudFlare to work." Many of our largest customers came because a critical employee of theirs fell in love with the free version of our service.
- Employee Referrals: we need to hire some of the smartest engineers in the world. Most enterprise SaaS companies have to hire recruiters and spend significant resources on hiring. We don't but get a constant stream of great candidates, most of whom are also CloudFlare users. In 2015, our employment acceptance rate was 1.6%, on par with some of the largest consumer Internet companies.
- QA: one of the hardest problems in software development is quality testing at production scale. When we develop a new feature we often offer it to our free customers first. Inevitably many volunteer to test the new code and help us work out the bugs. That allows an iteration and development cycle that is faster than most enterprise SaaS companies and a MUCH faster than any hardware or boxed software company.
- 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.
Today CloudFlare has 70%+ gross margins and is profitable (EBITDA)/break even (Net Income) even with the vast majority of our users paying us nothing.
Matthew Prince Co-founder & CEO, CloudFlare
It does not offer unlimited bandwidth. Unlimited bandwidth does not exist and is an impossibility. It is only a marketing term that states "the limit is higher than most users require". There is always a catch somewhere when anything is unlimited. With something that says unlimited, you are worse off than a service that has a specific known limit (or pay per use).
Read: https://www.cloudflare.com/terms/
SECTION 10: LIMITATION ON NON-HTML CACHING
You further agree that if, at CloudFlare’s sole discretion, you are deemed to have violated this section, or if CloudFlare, in its sole discretion, deems it necessary due to excessive burden or potential adverse impact on CloudFlare’s systems, potential adverse impact on other users, server processing power, server memory, abuse controls, or other reasons, CloudFlare may suspend or terminate your account without notice to or liability to you.
So if you cost them too much, they can stop providing you a service without notice.
Plus, what guarantee do you have that their service will not have large outages when you pay nothing?
I'm a long time user of Cloudflare. I have many sites on their free plan and a few on their Pro plans.
They can offer this free plan because they earn enough from their Premium plans to cover the costs.
By offering a free plan to thousands of users, they can analyse more web traffic, which makes their algorithms smarter and their premium plans worth so much. For instance, their web application firewall is so smart because it's been created from data across the web.
They do this at scale and they've been doing it for a long time so I wouldn't worry about them going out of business.