2/19/2023 0 Comments Revizto feeMost years, Autodesk would change the contracts with dealers, typically lowering margins and raising targets but also targeting specific products or markets.Īs for customers, it has always deployed price coercion to either incentivise users to upgrade or upscale, or price disadvantaging those that upgrade on their own timescale. Since the 1990s, Autodesk has had great marketing, together with a vice like grip on its VAR channel. When it first launched its suites, Autodesk’s then CEO Carl Bass said “Ironically, we now make more money by giving more software away.” Customer coercion Bundling the software in this way certainly appealed to customers. Product-wise Autodesk followed Adobe’s path and created ‘suites’ of products, as well as individual versions of popular tools (AutoCAD LT, AutoCAD, Revit etc.). Pre Coronavirus it established a share price of over $200 (historically traded $40-$60 per share). The net result has been more money to Autodesk per sale. I recently met a VAR that makes £1 for every AutoCAD LT sold online.Īdded to this subscription move, Autodesk increasingly went direct to large customers to put together massive Enterprise Licensing Agreements (typically lasting three years), cutting out its VARs again. Today, VARs now earn vastly reduced margins in return for ‘the right’ to service Autodesk’s clients. By moving to subscription Autodesk could get rid of the ‘lumpy’ upgrade revenue, lessen the piracy somewhat, lower marketing costs, and reduce the number of external distributors and VARs. Unlike Adobe, Autodesk had a high-cost route to market, with distributors and Value Added Resellers (VARs) all taking a slice of the big ticket software sales. The software industry could only look on in awe.Īutodesk was most certainly a disciple, but the rewards would be potentially even higher. The future renewal process also vastly reduced the cost of sales to Adobe. The subscription model also gave Adobe the additional benefit of its customers ending up with a higher cost of ownership, paying more compared to the old product upgrade lifecycles, where they might skip a release or three. The only downside was something called the ‘trough’, which is when revenues tank for a period due to the loss of big perpetual licence ‘joining fees’ but are then replaced by a torrent of income from monthly subscriptions. Subscription also helped reduce pirate copies and increase revenues. Subscribers got access to the full suite of Adobe tools and all future updates. Adobe bit the bullet and went subscription only, which meant owning its ‘Creative’ software no longer required a heavy up-front price tag and could be paid for with relatively small monthly fees. Selling perpetual licences is an inherently ‘lumpy’ and unpredictable business, as customers are usually very satiated by competent, old versions of mature products. One of the most successful is Adobe, who moved from perpetual licences of Adobe Creative Suite to Adobe Creative Cloud. Software developers have become experts in ‘squeezing the lemon’. While the construction market may change its business model once in a millennia, the software industry is constantly evolving to get more money out of its customers. Autodesk has always had ways and means to keep users reinvesting in its draughting tool, whether they want to, or not. Letting a version of AutoCAD lapse into an ‘obit’ version meant there would be an additional fee to bring it up to date, and you might even completely lose the right to upgrade, having to acquire a whole new licence. If a customer still wanted updates and patches, they would have to upgrade. Incompatibility between different versions made it harder to work with clients.Īutodesk then introduced the concept of what became known as an ‘obit’ (as in obituary), which meant that Autodesk would drop support to a version older than three releases back. Changes to the DWG format, which happened when some core new features were added, gave an added incentive to upgrade. In that time, users would typically upgrade every other release and the company’s key marketing drive was about trying to get customers to upgrade with rafts of new features. Multiple floppy disks came in a substantial box, along with a dongle (software lock), an overlay for a digitizer tablet and a pile of user manuals.įrom 1988 to 2003, Autodesk was not hard-set on producing a yearly release, with some intervals being between one and three years. Buying a perpetual licence for several thousand pounds (or dollars) would give you your own copy of the lingua franca of the CAD world. Historically speaking, purchasing products like AutoCAD was akin to joining a club. Subscription: customer value or corporate cash cow?
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