How can CloudFlare offer a free CDN with unlimited bandwidth?

Question

The CloudFlare free tier service offers unlimited bandwith while other CDNs charge starting at about $.10/gb.

CloudFlare does not have bandwidth limits. As long as the domains being added comply with our Terms of Service, CloudFlare does not impose any limits.

There's very little said on their website in the way of restrictions. The offer appears to be legit. Is there a catch?

Answer 1

Five reasons we offer a free version of the service and always will:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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

Answer 2

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?

Update

From a business perspective, CloudFlare can offer a free CDN as some of the free customers become paying customers. This provides a large marketing opportunity and helps cover the cost of the free tier.

If you place a large burden on the CloudFlare systems, you are likely to be encouraged to upgrade to a paid plan, or CloudFlare may limit the number of items being cached

Answer 3

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.

Answer 4

There's another aspect that should be mentioned here:

Freemium is a pricing strategy by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.

It's a common approach to get users familiar with the service and hope they will upgrade later on. Nothing wrong about freemium as long as the limitations are transparent.

With the free plan, it's also likely that you will run into other limits (other than bandwidth) that will cause you to upgrade your account. Especially if you run an ecommerce website, you'll need a lot of other features and functionalities (HTTPS, real-time analytics, ...) that you're willing to pay for.

Answer 5

CloudFlare is a caching proxy so egress (out) typically exceeds ingress (in), usually by around 4-5x. Our bandwidth bill is therefore calculated on egress so we don't pay for ingress. This is part of the reason we don't charge extra when a site on our network comes under a DDoS attack. An attack increases our ingress but, unless the attack is very large, our ingress traffic will still not exceed egress, and therefore doesn’t increase our bandwidth bill.

From: The Relative Cost of Bandwidth Around the World - Cloudflare Blog