Thoughts On CAD Software Pricing

Today I got a couple of interesting comments on my post titled “AutoCAD LT Price Rising By 20%“. Kevin Quigley from the UK wrote:

“Interesting. In the UK Autocad LT costs £1050 plus £200 a year subscription. Yes you did read that right. £1050 = $1679, so nearly 3 x the price it will be in India after the increase… [snip]… I already knew we in the UK were getting screwed compared to the USA pricing – I wasn’t aware we were getting totally shafted compared to everybody else as well.”

To which Hua-Wang from China replied:

“You can buy LT licenses from here in China, install it on computers in China, and use remote login, VNC etc. from UK and access it from there. There are companies that will host/run/maintain 24×7 the computers for you in China. You just ask for it. Simple arbitrage.”

While the very idea of doing something like this sounds bat-shit crazy, one cannot help but wonder if this doesn’t bear similarity to CAD on the Cloud. After all CAD on the Cloud involves running software off someone else’s computer, right? In fact, Russian MCAD software vendor ASCON offers their customers KOMPAS-3D on the Cloud in precisely this manner (see “CAD On The Cloud to Become A Reality With KOMPAS-3D“).

But here is the thing. The Autodesk EULA does not allow this kind of ingenious usage. It specifically does not allow users

  • to provide or make available any features or functionality of the Autodesk Materials to any person or entity (other than to and for Licensee itself for the purpose specified in the applicable License Type), whether or not over a network and whether or not on a hosted basis
  • to Install or Access or allow the Installation of or Access to the Autodesk Materials over the Internet or other non-local network, including, without limitation, use in connection with a wide area network (WAN), virtual private network (VPN), virtualization, Web hosting, time-sharing, service bureau, software as a service, cloud or other service or technology.

But this does raise an important question. When the CAD vendors do take CAD to the Cloud, will they continue with these vastly different prices for different countries? Will the software be running off different servers for different countries? Currently, CAD vendors blame their resellers for the need to have varied pricing. Will they continue to use that excuse when CAD moves to the Cloud?

At SYCODE we have just one set of prices for our products. An Autodesk customer in the UK may pay three times as much for a license of AutoCAD than his counterpart in India. But both will pay exactly the same amount if they purchase a SYCODE AutoCAD plug-in. I just feel that’s the way it ought to be.

  • Steam is doing this with games the did and sometimes still do a $=€ conversion, one of the reason is I think that they don’t want to hurt conventional resellers.
    I guess this will happen to cad to. One way to circumvent this is to get a foreign account with a foreign credit card. But it is illegal too.
    So in short you don’t really have anything to say about it. You can only hope you can choose one that doesn’t do this.

    • AFAIK, McNeel has a uniform price policy across the world.

      • Shyamalroy

        Deelip if you meant Bob McNeel, Rhino uses $1= Euro 1 pricing. See sales under http://www.rhino3d.com

  • John Evans

    I’m sure that this will fall on deaf ears but I’ts not my issue that the vendor has higher costs. The software is the same, and no one should have to pay more than another for the same product. If they had to ship it and install it, perhaps labor upcharges would be according to COL, but it’s not even a tangible item. It’s a license.

  • There is a local Rhino reseller in Australia which imposes its own margin. I rather like T-splines but I was disconcerted by the necessity to source Rhino from the VAR, rather than as a bundle with T-splines as US folk can. I’ve found IMSI/Design’s local Australian VAR, Mindscape, offer TurboCAD at the exchange rate or better, but others add margin without adding value.

    • Murray, strangely enough in Australia you can buy Rhino directly from us and get the tsplines bundle. (We can’t offer that in other parts of the world).

      Matt
      matt@tsplines.com

  • At the end of the day it is the management/marketing people who decide on the pricing of product and it has much more to do with what they believe each market will bear. Customers will often complain in forums like this and maybe to their dealer but few, if any, I tip, write to the people at the top and or set out to bring any REAL pressure to bear on their suppliers and hence the disparities will continue.

    Those in England and in places like Australia have higher wages than those in India and China so is it not reasonable to lower the price in those countries to ensure they can access and buy the products ‘competitively’?

    With regards the enforceability of Autodesk’s EULA. Put simply it is not an enforceable contract and Autodesk have proven this fact with their refusal to negotiate it, discuss it and or support it in writing with an affidavit or a statutory declaration when requested.

    Autodesk’s EULA is a virtual barrier; like an open gate can be a barrier to a mob of sheep so Autodesk’s EULA is to its customers! It will remain so whilst ever industry commentators keep repeating something they are not willing to put in any effort to report factually!

  • Kevin Quigley

    Paul I get your point about the wages, but here’s the thing. This has nothing to do with fairness. It is only about profit. Users in the USA have always paid dollars=pounds for most software – eg – Solidworks is $3995 in the USA, it is £3995 in the UK. On the basis of fairness then USA has the highest wages so they should pay the most, right?

    Deelip, McNeel do not have a single price worldwide unfortunately. I can go onto Novedge and buy Rhino in the USA and other places for $779. The cheapest I can buy it in the UK is about £800. Conversely I can by Modo from Luxology for the $995 direct. Guess what I bought?

    • Kevin, you are right. I stand corrected. Looks like McNeel or its resellers in the UK are doing the same thing as other CAD vendors.

      • CADG

        Reason is simple. up the date they ship plastic (box, disc, paper) , is cheaper to move plastic inside USA, but expensive to deliver different places on the world (adding arbitrary local import taxes also). they are changing this with the coming releases to download only.

        • That’s the worst explanation (shipping plastic in the US) that I’ve ever heard. And I’ve heard some bad ones. Most of the physical media aren’t sourced in the US for Europe. They tend to come out of a local fulfilment centres (often in Ireland for Europe). It has nothing to do with the cost of shipping media. Believe me.

          Al

          • Al is correct; our Autodesk software is shipped from Singapore to us in Sydney (Aust.) a distance of 6041 kms (as the crow flys).

            And, as Autodesk’s invoice shows AutoCADs worth to be $3.97 (AUD.) and Inventor to be $9.96 (AUD.) you guys in Europe should be paying a lot less than this per licence just on distance alone 😀

          • Paul – that cost on the commercial invoice is most likely the cost of the media, rather than the content of the media.

          • Paulw

            Yep Al, we can probably agree we each know the great cons perpetrated by companies who set out to manipulate (reduce) their payments to customs at point of entry. But there is a problem with this particular situation and it is in the wording. Clearly these documents indicate it is the product.
            The other issue 😉 is, if it were the media only then a comparison of that which is supplied should be comparable and they are not (bear in mind these arrived as asingle delivery in the same box). ie. Three (3) disks for AutoCAD at $1.32 (AUD) each and nine (9) for Inventor at $1.10 (AUD) each. Does this indicate Autodesk gets a discount for the volume of disks required for Inventor or does it show Inventor and Vault are cheaper to produce?

          • Al,

            Could not resist adding this comment to our previous ones with a grin on my face.

            My Inventor Suite upgrade arrived today as Autodesk product Design Suite on USB key encased, like a piece of jewellery, in a block 140*90*30mm black cardboard box with a colour printed ‘slide over’ sleeve.

            The invoice accompanying the Commercial Product (Autodesk’s description on the invoice(s) not mine) put its value at AUD $0.01.

            AutoCAD 2012 arrived the other week and its value was AUD $2.75.

            So there you go; Autodesk’s Inventor, Autodesk Mechanical, Autodesk Showcase, Mudbox and Autodesk 3DS Design, Fusion and Sketch Book Designer are worth one(1) cent and AutoCAD is worth $2.75.

    • Hua-wang

      In that case, ask the UK govt. to do a 1:r (r>2) split in its currency. So that £3995 will be cheaper than $3995. Problem solved.

      It’s just a joke, but you are free to take it seriously 🙂

  • Anonymous

    The

  • Anonymous

    The wage are different in different countries.If a chinese should pay $1679=1679 * 6 RMB to buy a AUTOCAD, they will choose to by other CAD,such as ZWCAD from ITC memembers

    • Hua-wang

      Great! If $1679=1679 * 6 RMB makes Chinese customers switch to ZWCAD, why aren’t their western counterparts so slippery? Assuming ZWCAD serves the purpose of both UK customers and Chinese customers well enough.

  • Kevin De Smet

    Don’t dismiss taxes either, they widely differ, but probably not enough to justify the price differential.

  • Sunithbabu

    CAD on Cloud will be the future and pricing will definitely vary based on which person and from which country they are accessing using the IP.

  • Shyamalroy

    Deelip, this is a topic I have been struggling with

    I checked:

    If I buy a ticket from San Francisco to Paris logging as USA origin at Air France the price shown was $885, if I bought the same ticket logging in as France as origin of purchase, the price was 1239 Euros!

    Same airplane same service so why the French are required to pay more?

    Mercedez E350 sells for $48000 in California – buy the same car in Germany for > 50000 Euros. Same car so why the Germans paying more for their own car in their own country?

    At present we have the same price worldwide in all countries except Europe where $1=1Euro. We are following Bob McNeil’s model with Rhino pricing that probably is the highest selling most successful web based software in the $1K range.

    Software pricing is critical for company’s that use multi level channels to make sure it is profitable for dealers while being rational for customers.

    So far I have not received any complaints from any of our European customers that number in high 4 digits.

    • Shyamalroy, a Merc’ E350 is list priced and as starting at $128,900 in Australia?

      Distance adds to price I am sure but $70.000+ seem a lot for a boat ride 😉 doesn’t. But simplistic price comparisons for items like this can easily ignore some very important reasons.

      However, software, particulay that which is downloaded, in the main should/can be handled similar to that which Deelip. Even if what he does seems fair because of exchange rates even Deelip customers are not necessarily on a completely level playing field.
      Equally, if a predominate amount of Deelip’s income was found to be coming from a market place with an unfavourable exchange rate return to Deelip he may be forced to consider varying the price for a particular market. In raising the prices thus some would be ‘disadvantaged’ whilst increasing his profits from others – unjustifiable some will say but it is just one of the vagaries of free marketeering.

      • Shyamalroy

        Paul I wholeheartedly agree with you.

        The real value of buying software locally is you have somebody to call locally if the transaction is not satisfactory.

        Deelip is a long established vendor so there is credibility – it is not two guys working out of a phone booth in Goa!

        Exchange rates mean jack sh*t – it is buyers security that counts.

        If one wants to buy software on the net and is willing to take chances – sure one global price will make sense. But if one wants to make sure that the purchase is secure than one needs to pay local price.

        I have lived and worked in Europe in the early part of my career with big blue in the seventies. I still can not figure out why there was a 1.4X multiplier on everything sold in Europe on boxes that cost millions of dollars.

        So the key issues are buyong security, availibility of local contact in case something goes wrong, and overall value proposition.

        Today when custmers buy any engineering product they should expect 40X ROI – otherwise come to vegas and bet on double zero on Roulette!!!

  • Kevin Quigley

    There is a reseller here in the UK I know who says Autodesk calls the UK “treasure Island”! I think that says it all. I have wondered for many years why the European Union have not instigated investigations into major software vendors for these pricing policies. They get their knickers in a twist about Microsoft making Internet Explorer the default browser in Windows, yet they totally miss the fact that the software industry rips Europe off on a massive scale.

    Someone made the comment about shipping costs for physical product being cheaper in the USA. That has no relevance at all. When you ship a product you pay delivery charges on top of the cost, and how many products these days come as a fully boxed up with manual package? SolidWorks doesn’t. Even those that do this tend to use print on demand manuals from the likes of Lulu.com, and personally I would rather have the option of buying a manual at extra cost rather than pay a premium in the software cost. In any case shipping costs do not account for core price differentials. Local taxes are always added after and most businesses get these back anyway (like VAT) so they are irrelevant.

    As a final point it irritates me off no end when I have trialled software without any input from anyone and made the decision to buy only to be told I have to buy via a reseller, knowing full well they are getting a nice 40 to 50% margin for doing bugger all. I cannot actually recall buying any sub £1000 software I have needed a reseller demo or support from.

    I think the whole sales model for software needs to change to a direct sale. VARs can still exist but they have to adapt (like their customer have had to) to not rely on the high margin software sales, and start to offer value on consultancy and training. Too many VARs have little expertise in the software they sell. Those that do are like gold dust. If the VARs cannot offer expertise they need to cut the margins and offer better value.

    • Kevin your guys may be have 40-50% margins but I can assure you that is not the case for all Autodesk’s dealers in Australia.

      But if your looking to who make the real margins just take a look at the commercial invoice I have in my hand – from Autodesk. It has some small print that says “For Customs Declaration only” 😉
      – for the Inventor Suite $9.96 (AUD)
      – for AutoCAD $3.97 (AUD)

      Now come on guys who is conning who? Autodesk has valued both these products below $10.00 (AUD) – which it must be said is what it is worth to them else they are not ‘telling the truth’ to the customs guys. Autodesk Australia ‘on sells’ these products – (to users) – for $9000.00+ (Inventor) and $6000.00+ for AutoCAD through dealers getting between 25% (big dealers) and in my experience 18% or less.

      In the main price is a marketing thing. If Autodesk’s management (or any other company) wants to wring more money from one market(customer) vs another and customers don’t (collectively) react appropriately, rest assured they will do so.

      Is it possible for an AutoCAD to be worth $3.97. You bet. For those who know something about production line manufacturing will also know the cost of items produced this way and how (substantially) those cost rise as a result of ‘additional costs’.

      In companies like Autodesk reasons can always be found to justify higher prices. R&D is a favorite (hide) with the true value and cost is never revealed. Marketing/advertising/shipping and junkets for management all must be added to the overall cost of a product. Don’t forget – in Autodesk’s case – some extremely large legal costs fobbing off lunatics like me 😀 and wasting/chasing money on the likes of Vernon and copyright of dwg.

      But having said all this; I never forget I work for myself. A result of that situation is that I also must ‘choose/decide’ what I charge a customer and I know how and why I do what I do 🙂

      • murray

        I wonder whether customs would have anything to say if you were flying out of the country with your pockets stuffed with, say, AUD 500K in cash, and you declared the value as what it cost the government to print?

  • Rick McWilliams

    CAD companies cannot seem to have a price list. I am directed to call a reseller for a price quote. They cannot even get back to me in a week. Catia is the best, they have at least 30 instrutable items that are added to get the price. An obvious dodge to allow price fixing. 2^30 different price combinations to do mostly the same thing. Solidworks gets crazy with all of the pieces that can add up to $30,000 US.

  • Shyamalroy

    This is a moot conversation.

    Since the beginning of time people have paid diferrent price for everything depending on where they live.

    Unless they could get it from one place.

    • Kevin Quigley

      Maybe that is the point. With the internet delivery model you CAN get it from the same place. The problem is that software vendors may well sell via a reseller network, but the actual product is delivered via the internet. All the systems I use here – bar none – you download the updates and new releases electronically. SolidWorks insists on sending me the new version DVD every year but by the time I get it I am already on the next SP up, so I have a nice collection of SolidWorks DVDs used as coasters…..

      The point is that progressive software companies offer users choice. If they want to stick to the traditional VAR and local support model fine – but the VARs need to adjust they way they sell to rely less on the margin from the sale. If they want to buy direct at a single source price, they can. Over time, as people get used to the systems they rely less and less on the VAR – that is a simple equation.

      The old adage, you get what you pay for needs to start to apply to this process. If I want to buy software on price, I should be able to. If I want the service of the VAR, I should be prepared to pay for it (but the VAR needs to demonstrate “value added”.

      • Paulw

        Kevin, because of the situation created between Autodesk and me it has meant I have been forced to pay my two (2) AutoCAD and Inventor subscriptions to Autodesk through a dealer a thousand kilometers from my office even though there are two dealers within 30kms.

        Even before that situation came into play, the closer dealers were rarely if ever called upon for software support – but they continued, and continue, to get their full margins for simply passing on my moneys to Autodesk. When the local dealers chose to refuse to accept and process my subscription renewals Autodesk were asked to accept (from me) direct payment.

        No can do they said, “Autodesk does not deal directly …….” was the reply! So Autodesk send me the reminders for each impending subscription renewal; Autodesk ship the product directly to me (from Singapore) but will not accept payment for the product directly. I smile at the stupidity surrounding each of my dealings with Autodesk, but the one thing I know for sure is that if ‘the cloud’ or Internet delivery (for CAD) goes ahead the issue of direct payment will raise its head again – in theory this should be good for end users and ‘reduce’ costs.

        The real problem though for (some) vendors dealing directly with end users means the dealers can no longer be used to shield CAD vendors -from their users – and the issues of licencing terms and conditions will land firmly at the feet of those responsible; and they are not going to like what that will entail and ultimately force them to accept!

  • Let me tell you the only reason they do is to extract as much money as possible..

    All they do is set the price of the software to what consumers in each region can bear.

    I’m saying this from experience dealing with 2 major vendors 😉

  • Hua-wang

    Its a no brainer. The EULA will be adapted for the cloud.
    … The license will not permit computers connecting to the cloud from a country to which it is not intended to. Sub-leasing, re-hosting, IP re-routing, or any other technology that enables users to access the services to whom it was not intended to will be in violation of this agreement…

    The software industry thrives on creating economics of scarcity through legal ring-fencing. Software replication cost is close to zero. Without legal ring-fencing, supply is infinity.

  • Hua-wang

    Deelip, if SYCODE is being priced uniformly in all markets, may be you are not milking it for all its worth… Just a thought.

    • Sorry, I have no desire of milking my customers for all they are worth.

      • Hua-wang

        You are an engineer at heart. I like that.

  • Hua-wang

    The prices of software products from some of the bigger and bulkier players varies greatly within the same country/same province. It’s based on “negotiation” and is usually accompanied by a non-disclosure agreement of the purchase price. But unless people share the prices in forums like these, they will continue to be taken for a jolly ride. Price discovery is a bigger problem in these markets as the volumes are quite low. That’s where money seems to be now a days.

  • Jay

    Unfortunately prices of software (and many other products) are not decided based on cost of production. Even the Demand-Supply rule plays a very marginal role in deciding the price. Prices are mainly decided based on how much a customer is able/willing to pay. Able relates to the profits that the customer is making by making use of the software. For example, in place like India a software license for a CAD product for home design could cost as much as 50% of the home itself if purchased at USA price point. Willing relates to the fact that if the price is above a certain level the user will just use a pirated copy given the fact that most governments do not enforce piracy laws. Infact Chinese govt. explicitly asks software companies to reduce their prices if they want any help from the govt. to tackle rampant piracy. I believe prices would be equal when wages,standard of living, laws and taxes around the globe will become equal (read NEVER).

  • But is it possible to travel to the US, purchase autocad lt there and then bring it back and use it in the UK (or somewhere else) legally?

    • No. I believe the software has to be used in the country where it was purchased.

      • Maybe, not completely correct Deelip. Your looking at it from one point of view Deelip without taking into account what Autodesk has done in the past, will actually do and allow – for a dollar.

        There is/was a “system” in place for moving between jurisdictions and it was originally laid out in an Autodesk QA page – cannot be bothered to check if current tho’. Basically Autodesk allows for a “localization” process to occur should a “licence holder move country”. Your use of software becomes “legal in Autodesk’s terms” when you PAY Autodesk an additional sum of money. I can speak from experience here because we acted as a go between in this process, on one occasion for a major company, netting not a single cent from a process which netted Autodesk quite a lot of additional money on top of an already paid for licence.

        A second “process” Autodesk has/had is for those travelling and using their Autodek software enroute or in different jurisdictions. This “process’ involves contacting Autodesk and ASKING permission to use their software in another county – preferably before you arrive – and Autodesk’s “YES” will come after parting with some hard earned cash. For one of our customers – on one trip travelling to six countries – this meant paying Autodesk more in transfer fees, in a four week working tour, than the original licence cost.

        With Autodesk anything is possible if you have the money, can afford to pay and accept Autodesk has the right to keep putting its hand out whenever they feel a dollar is better in their pocket than yours!

        Marko, you can quite probably do what you suggest but it will come at a price!

        • Well, I was thinking more along the lines of saving money, not paying more for an overpriced 30 year old peace of software that has seen very minor improvements since I’ve started using it 10 years ago, and is struggling with the same stability issues since!

          • Sorry Marko but Autodesk is a profit oriented company so each of those within believe only in maximizing returns. Not a criticism it’s just a fact that plays against good will to customers.