Price Slashes in CAD: the Sign of the Times

By Kenneth Wong

Discount is a double-edged sword, as Alibre discovered. In August, the company slashed the cost of its flagship software from $999 to $99, a whopping 90%  discount. Though the company warned the offer wouldn’t last forever, it carefully avoided spelling out the expiration date. This left some CAD buyers wondering if the move was a cash-strapped business’s effort to raise revenues,  a common practice in harsh economic times. Consequently, some greeted the news with suspicion and ambivalence. Even some of Alibre’s own value-added resellers (VARs) questioned the wisdom of the offer. (It was nearly impossible for VARs to make substantial profit from $99 transactions.)

Perhaps Alibre did anticipate the backlash. In Alibre’s own words, the new pricing was “the boldest marketing initiative in the history of CAD.” You might snicker at the hyperbole, but you have to admit it was impossible to ignore. The buzz generated, both good and bad, catapulted Alibre into the industry press’s headlines. For weeks, CAD blogs were set ablaze by the firestorm from Alibre’s $99 offer.

In September, Alibre ended the sales and restored the original $999 price tag for its flagship software. But the company has evidently learned to wield the double-edged sword to its advantage. In its latest promotional email to customers, the company pitches what it calls “an offer that rivals our $99 deal.”

The company writes, “If you buy either Alibre Design Standard, Professional, or Expert, and also purchase an equivalent maintenance contract, you’ll get $900 off the list price for the Alibre Design suite you choose.”

Sales used to give off a whiff of desperation. But in this harsh economy, it may become a standard practice, even for recognized CAD brands and healthy balance sheets. Though not as notable as Alibre’s, more discounts are on the way.

Fig 1. Alibre’s controversial $99 offer may have ended, but the company continues to offer deep discount to drum up sales.

Lighter Pricing for LT
Earlier this month, Autodesk joins the bargain bin with a $300 rebate offer for its LT product line (limited to a maximum of five seats total per customer invoice address, only available in the U.S. and Canada). From now till January 15,  2010, you may apply the rebate on purchases of AutoCAD LT ($1,375 for electronic download with subscription, $1,075 after rebate), Autodesk Inventor LT ($1,190 for electronic download with subscription, $890 after rebate), or Autodesk Inventor LT Suite ($1,605.00 for electronic download with subscription, $1,305 after rebate). But if you happen to be converting from a free trial version of AutoCAD LT, the offer gets sweeter. The company offers a $250 discount on top of the $300 rebate, adding up to $550 in reduction. So the electronic download license of AutoCAD LT with subscription, regularly priced $1,395,  could be bought for as low as $845. (If you take this approach, you won’t need to reinstall the software, the company clarifies.)

Kubotek Back in the Game
Kubotek, long respected as a pioneer in direct editing, recently began sending out teasers about its upcoming release, KeyCreator V9. “More explicit transformation capabilities have also been added, including the ability to dynamically deform curves, copy and move entities with Kubotek`s exclusive DynaHandle 3D Direct Editing Handle,” the announcement reads.

But the lure is not just in the interface refinements; it’s also in the pricing. “Effective immediately, new licenses of KeyCreator will be sold at $2,995, a $700 discount,” says Kobotek (offer effective till December 31, 2009).

Fig 2. Kubotek pre-sells the next version, KeyCreator 9, a month in advance, with a $700 discount.

On the auspicious date September 9, 2009 (9/9/09), echoing Alibre’s recent campaign, Kubotek began selling its Spectrum Multi-CAD Viewer for $99. It normally sells for $695, the company points out. The CATIA V5-compatible version of the same viewer has also been cut to $599. It normally sells for 2,500.

Apparently Kubotek is banking on the next release. It’s pushing existing customers using any version of KeyCreator or CADKEY to upgrade to the new version (scheduled for release in November) for $1,495. 

The XT-Corel Combo
A year ago, IMSI/Design created ripples in the 2D drafting market with the release of DoubleCAD XT, a free download. Obviously it can’t slash its $0 pricing any further, but it’s just begun offering a combo deal—DoubleCAD XT Pro and Corel DESIGNER—for $695. Since DoubleCAD XT Pro itself retails for $695 and Corel DESIGNER retails for $999,  the deal is the equivalent of getting a free license of Corel DESIGNER with every copy of DoubleCAD XT Pro.

DoubleCAD XT proves to be a worthy rival to AutoCAD LT,  offering comparable 2D drafting and drawing features for a significantly lower cost. In Corel DESIGNER, DoubleCAD XT Pro users get a rich set of graphics and layout tools to create not only accurate but also eye-catching illustrations.

Fig 3. IMSI/Design combines DoubleCAD XT Pro and Corel DESIGNER into a single package, priced for $695. DoubleCAD XT Pro alone retails for $695, so the combo’s pricing is the equivalent of giving away Corel DESIGNER for free.

The Sign of the Times
In August, CIMdata, a market researcher that tracks the product lifecycle market (PLM), revised its previous forecasts, citing “the continuing impact of the global economy.” Earlier, the firm had forecasted that “the comprehensive PLM market would achieve a 6.3% CAGR (compounded annual growth rate) over the next five years to reach nearly $36 billion in revenues.”  The revised prediction calls for a decline 2.1% (from 2008 results), with five year CAGR reaching a modest 3.5%.

Sluggish sales may persuade more software vendors to come up with creative bundling and attractive discounts. According to a recent Reuters news story (“Summers: U.S. economic recovery on track,” October 21, 2009), “The jobless rate is now at a 26-year-high,” teetering at 9.8 %. CAD vendors know struggling manufacturers and displaced engineers aren’t in a position to pay the usual $2,000-$5,000 to acquire new software. So they’ll have to go where the buyers are looking—the virtual bargain bins.