The pricing change is offered in response to a growing trend in software towards less big-ticket upfront prices
All eyes on Adobe. Adobe revenue took a dip in Q1, 2013 after it announced a complete switch to term pricing, but now enjoys record revenue. Graph from Statista.
The CAD software industry has lagged behind other software categories that have, for the most part, already adopted term pricing. Onshape, a relatively recently started CAD company and an industry media darling, offers only SaaS pricing—no perpetual license. Founded by the same team that created SOLIDWORKS, Onshape has taken as its inspiration Salesforce.com, which revolutionized and overtook contact management/sales and was the first to be hugely successful with the SaaS model.
Peter Rucinski, Director of Product Portfolio Management, SOLIDWORKS Desktop CAD talks about the new option to rent SOLIDWORKS.
"But there can be problems with CAD-in-a-browser," says Peter Rucinski, SOLIDWORKS Director of Product Portfolio Management. “What happens to your intellectual property, all your CAD models, when you stop paying the monthly fee?”
Sure, they'll give you your data in an industry file standard like STEP or IGES.
“That's like asking for your color photos back and they give you black and white,” said Rucinski, citing the richness lost in the conversion with downloaded files potentially lacking parametrics, design intent, mating consideration, etc.
Industry leader Autodesk has also firmly announced its shift towards monthly printing. It's latest batch of CAD products, the 360 series, is offered only with monthly pricing. It offers a SaaS pricing for its Fusion360, a 3D MCAD product. Its Inventor recently went to pay-by-the-month pricing, as did most Autodesk software starting January 2016.
“Our main goal is to give SOLIDWORKS customers the flexibility they need,” says Rucinski. “This includes browser-based or hybrid software solutions, local or cloud data storage, and perpetual or SaaS licensing models”
Offering term pricing, rather than make customers pony up the $4K license fee for what is only a project surge or forcing a penniless startup to blow the budget on software, will allow all of those schooled in SOLIDWORKS to more easily acquire their familiar application -- rather than have them turn to rental software offered by a competing company.
“Nobody wants to start using other CAD software,” said Rucinski. “They'd rather stick with software they are familiar with. Now they will have that choice.”
While Adobe’s migration to term pricing is clearly a success story, Autodesk’s transition is still uncertain. Since its announcement, the software giant ($2.5B in annual sales) check has suffered a considerable decline in revenue and five straight quarterly losses.
A drop in revenue is to be expected. Getting thousands of dollars up front versus getting it one month at a time is the crux of the perpetual-to-term licensing transition. Says industry watcher Ralph Grabowski, who has also studied monthly pricing from the user’s point of view, the cost to the user is little at first but after as little as 8 months, users end up paying more. That’s more revenue for the vendor -- if they can hang in there.
By contrast, a software vendor that has sold a perpetual license has to continually improve the software to make upgrade revenue. A paid upgrade is substantially less than a perpetual license.
Poor vendor.
It is that period of over payment that the CAD software vendors, including Dassault Systèmes, are counting on. Should SOLIDWORKS’ term pricing prove popular, the company will have to wait a few quarters for revenues to come back up.
But with both options, it appears that SOLIDWORKS has hedged its bets with the introduction of term pricing. It should be able to preserve – and maybe grow -- its user base as well as guarding against defection to design software that tempts users with cheap monthly pricing.