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Aug 2011 11

Adobe software subscriptions -- Missed it by "that much"!

Randomstrings Adobe, Piracy, Software

I'm pretty strong supporter of Adobe products or at least I think I must be because I have purchased Adobe Photoshop, Adobe Premiere and Adobe After Effects as well as upgrading each many times.  I'm on my 4th or 5th iteration of photoshop at this point and after some quick and dirty math  I think Adobe has gotten well over $5000 of my hard earned money over the years.  These are all for my own personal use and because as a software engineer I think software piracy is just wrong.  Even so that still hurts a tad.

Recently Adobe announced that they would be offering their software at rental subscription prices and I was excited!   What a great idea!!  But did they do it right?  I don't think so.. but they are so close!

Lets take Adobe Flash Professional as an example of whats going on, and their likely reasons behind it;  If you purchase the full version it costs $799 and the simple fact of the matter is, most individuals wont want to pay that kind of money for a piece of software.  So really the only purchasers of their code were companies that could easily absorb that cost (or the rare individual like myself that is willing to pay).   At $799 even "honest joe" will pirate the software if he really wants it.

At that price point they have completely alienated the casual user.   More over that price point only serves to encourage the casual user to pirate the software because its not even remotely affordable.  I'm not saying its right to pirate by any stretch, but I am saying that even an honest person can rationalize doing so when the price point is so far out of their reach.   Many would say eight hundred or eight million, it makes no matter so screw it.

More over, most software companies look at each pirated copy of their software as lost revenue, thus as a general rule they resort to raising the price even higher so that the companies that do make the purchase help to recoup costs and offset the fact that the software is pirated so much.. causing a vicious cycle.  Ubisoft is very guilty of this..

So the question becomes, how do you get the casual user?   What is the price point most people are willing to throw at a piece of software?  And in the subscription model;  How much are people willing to spend monthly on something?

Lowering the cost of the software to something the casual user would be able to afford simply isn't the answer because then suddenly they lose all the money they were getting when companies were purchasing the software.  So even though it sure would be nice to get Adobe Flash Professional for $50.. it wont happen..heh

So the subscription model really does seem like a good option as it allows those who have the money to purchase the full software to do so, and those who want to try the software out or to keep an active subscription to do so without breaking the bank.

But here is where they are missing a huge opportunity that most MMO game creators have already figured out..  Something I like to refer to as the 10% rule or the 90/10 rule (maybe related to the Pareto Principle?).

And that is simply, if you set the monthly subscription rate at the correct price point a vast majority of people wont bother to ever cancel it because it's beneath their notice.    According to my sources inside, Blizzard has about 10% of their accounts that remain open and paid for, but they are never played simply because the monthly fee is low enough that it's below the radar of the consumer.

I really do think that the subscription model is the future of software publishing and purchasing, but I really believe Adobe has missed the mark a tad by setting the price point too high.

In my humble opinion Adobe is a few dollars away from a goldmine..  If they were to set the price point for their new subscription model to $15 with a year contract or $25 (at most!) without, most people would never bother to cancel the subscription.   Then maybe they could also offer a $35 rent to own model or even a variable "choose your own rate" rent to own model as I'm sure there are folks who'd want that too..   But the current $49 month to month is just too high as the first month they don't use it, they'll notice and cancel it.

Even so I salute you Adobe for bringing your awesome software to the casual users again.. Thanks for that.   Now if you don't mind I'm gonna go buy Flash Professional.

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