Alibre CEO Responds To My Views On Continued Discounts

In a previous post titled “Alibre’s Heavy Discounts Continue” I questioned the willingness of some of Alibre’s resellers to play along Alibre in their discount game. This morning, Paul Grayson, CEO of Alibre, sent me this email offering a counter view.

Hi Deelip,

I am glad you are continuing to follow our pricing initiatives. We appreciate the coverage.

However, I have must disagree with your analysis and conclusions. Fundamentally you did cursory level Internet research that found “official suggested retail prices” and drew two incorrect conclusions:
1. The resellers are not participating and the listed prices are the best a customer can get from them
2. The resellers are unhappy and are suffering from these pricing initiatives

To the contrary, all of our major resellers are signed up and actively participating. You received an English language email on Wednesday because you are in the US database. There is a normal 1-2 day delay between the distribution of US emails and non-English language emails to account for the time required to translate them. Those emails all went out yesterday. We actively support resellers by sending 10’s of thousands of emails on their behalf, guaranteeing that they get the sales.

It is very common for resellers and retailers to have a store with an official SRP while also offering discounted prices via email, ads, and other direct marketing vehicles, especially during the holiday season. In fact, if an unregistered customer visits our store they will see Alibre Design Standard listed for $999. They can however click on the Home Page banner that advertises the promotional prices, register and then purchase with the discounts.

Also, if you do a Google search for Alibre, you will see an ad from Novedge advertising Alibre Design Standard for $94. My point being that you should not expect to find consistent pricing across all forms of media in any market, in part because vendors often do promotions and communicate them directly to customers and via their resellers and because the Internet enables rapid distribution and access to real-time changes. These changes can often take days or weeks to replicate through various media, even if they are intended to be permanent.

Our pricing initiatives have been amazingly successful for ourselves and all of the resellers that participated in them. You and other CAD industry observers are missing the real story here. Mainstream 3D CAD prices are grossly out of step with the market and the economy. There are a large number of prospects that want to own professional level 3D CAD and they purchase quickly and with little fiction when given a compelling offer. Our business model is lean and highly scalable. We make a good profit at $99 or $197 and these offers bring in many more people to our “store”. A percentage of these people want more features (sheet metal, photo rendering, data storage, CAM, translation filters, etc.) and buy Alibre Design Professional, Alibre Design Expert, Alibre Translate, and Alibre CAM. We sell thousands of copies at the lower prices to a market segment that is very price sensitive and the others self-select for more functionality at higher prices. There is no cannibalization, simply more customers buying more seats of all product levels.

Best regards,

Paul

Paul makes some good points. And he is right. I did get an email from my local Alibre reseller the day after I got the email from Alibre with the $197 offer for Alibre Design Standard. Not surprisingly, the price offered by the reseller was significantly higher than that of Alibre’s. Out of curiosity, I sent an email back to the reseller asking him why his price was higher than Alibre’s and whether he was offering anything more than what Alibre was offering for $197. Again, not surprisingly, I did not receive a reply.

Update (14-Dec-09)

Eventually, I did get this reply from the Alibre reseller today.

Hello Deelip,

Greetings!!

Thanks for your mail Mr Deelip, Sorry for the delay in my reply. I am regular vistior to your blog and I really appreciate your opinons whatever you share in your blog. Regarding the issue of price difference, we do offer promotions slightly higher than the Alibre to compensate the unforeseen cost we incur during our relationship with our client. This may include, instructing to engineers on exploring the software(phone/visit/email), technical support which is our binding towards any client. Hence considering the overall scenario we hope we are providing a decent pricing to our prospects.

Thanks,

Best Regards,

Ashish A Gothe