Autodesk’s New Upgrade Pricing Policy

A tweet from Brad Holtz of Cyon Reasearch alerted me to Autodesk’s new upgrade pricing policy due to take effect in March next year. According to this page:

Autodesk is introducing a new upgrade pricing model that will go into effect on March 16, 2010. After that date, all upgrades, from any release level, will cost 50% of the price of a new license. This is a departure from the way upgrades have always been priced – which has been based on the “coming from” release level. For example, after March 15, customers upgrading from AutoCAD 2008, 2009 (or 2010) will all pay the same price: 1/2 the cost of a new license of AutoCAD.

Autodesk’s current upgrade pricing policy is already geared towards “coaxing” customers to choose subscription over normal upgrades. According to the prices on the Autodesk Store, upgrading from AutoCAD 2009 to 2010 costs $595. Subscription stands at $450. So it makes more sense to stay on subscription than to upgrade every year. The cost to upgrade from 2008 and 2007 to 2010 is $1195 and $1795 respectively. Both these prices are more than what a customer would have paid if he was on subscription. Moreover, you cannot upgrade from retired versions of AutoCAD (2006 or earlier). You need to buy a new license which costs $3975. Of course, you can make use of the Autodesk Legacy Program to get a 30% discount. But you will have to buy Subscription along with it, which brings down the discount to about 20%. Moreover, for reasons that are not obvious to me, the Autodesk Legacy Program is available to customers in US, Canada and Latin America only. I thought customers in poor countries needed assistance.

Anyways, all this is old stuff. Now let’s analyze this new upgrade pricing policy. With this new policy, assuming that the policy was already in effect, upgrading from AutoCAD 2007, 2008 or 2009 will cost $1987.5. That’s half of $3975, the cost of a new license. So comparing this with current upgrade prices, upgrades from 2007, 2008 and 2009 will be an extra $192.5, $792.5 and $1392.5 respectively. So if I understand this correctly, a customer who still prefers to stay off subscription would be better off if he did not upgrade for 3 years as opposed to every year. As of now, customers upgrading every year (for whatever reason) lose only $145 ($595 – $450). But with this new pricing policy they will lose $1537.5 ($1987.5 – $450). Interestingly, the losses will decrease as the customer delays upgrading.

So as I see it, this new policy will have one of two effects on Autodesk customers who are currently not on subscription. It will either make them opt for subscription or it will make them delay upgrading their software. Autodesk hopes it will be the former. Because if it the latter then Autodesk may find itself in far more trouble that what it already is. I say this because it will not see any sign of money from non-subscription customers for the next three years. For their sake, I hope the people at Autodesk who have formulated this new policy know what they are doing.

Personally, I think this new upgrade pricing policy has the potential to add to Autodesk’s existing financial troubles. Here is why. Basically, most customers who are not on subscription are quite content with the version of AutoCAD that they already have. If they wanted the new features that get added to AutoCAD every year, they would be on subscription already. The current upgrade pricing policy ensures that. Moreover we are at the start of the three year DWG compatibility cycle that Autodesk has imposed on itself. So if an AutoCAD user does not upgrade for the next two years, he will still be able to exchange data with users of AutoCAD 2011 and 2012. My point is that an AutoCAD user who is not on subscription and who is quite happy with the version he has would probably sit tight for two more years and upgrade directly when AutoCAD 2013 comes out if he feels the need to do so. If history is anything to go by, AutoCAD 2013 is probably when Autodesk will change the DWG file format.

If you are an AutoCAD user who is not on subscription, I would like to hear what you think. Please do leave a comment.